Understanding a “Home Warranty” in Real Estate

What Is a Home Warranty, and Why Does It Matter?

A home warranty is like a service plan for your house. It helps cover the cost of fixing or replacing things like appliances or home systems (plumbing, heating, etc.) when they break down due to normal wear and tear. It’s not the same as homeowner’s insurance, which covers damage from things like fires or storms. Home Warranties are great for negotiating a deal, and for marketing your property. Buyers can ask for sellers to pay for a standard 1-year home warranty if the home has some older systems or appliances. And sellers who offer a 1-year home warranty as part of their listing can lure in more buyers.

What Does a Home Warranty Cover?

A home warranty usually covers:

• Appliances: Refrigerator, oven, dishwasher, washer, dryer, etc.
• Home Systems: Heating, air conditioning, plumbing, and electrical systems.

Each plan is different, so it’s important to check exactly what’s included. Some things, like roofs or pools, might cost extra to add to the plan.

How to Choose a Home Warranty Company:

1. Your Agent Can Direct You
   They have likely interacted with  the top companies so can tell direct you
   
2. Check Reviews
   If inquiring on your own, look at companies with good reviews and a reputation for fast service
3. Compare Plans
   Companies offer different tiered options; Make sure the plan covers what you need, like specific appliances or systems in your home.
4. Understand the Costs
   Look at both the annual fee and the service fee (what you pay each time you make a claim).
5. Ask About Limits
   Some companies have limits on how much they’ll pay for repairs or replacements. Make sure these limits are reasonable.

Why Should a Seller Offer a Home Warranty?

Whether a home is in excellent condition or it has older systems and appliances, offering a home warranty when selling your house is a good idea because it:

1. Entices Buyers
   Buyers feel more confident knowing they’ll have help with repairs if something breaks after they move in.
2. Make Your Home Stand Out
   A warranty can set your home apart from others on the market.
3. Protect You as a Seller
   If something breaks right after the sale, the warranty can handle it instead of the buyer blaming you.
4. Gives Buyers Peace of Mind
   New homeowners have often used up their cash reserves, so it’s good to know that the costs will be less should something happen.

A home warranty is a win-win. Buyers get some reassurance, and sellers can sell their home faster and with fewer worries. It’s an extra layer of protection that makes the process smoother for everyone!

Additional Resources