Why Offer a Home Warranty?
A home warranty is a service contract that covers the repair or replacement of major home systems and appliances for a specific period, typically one year. Offering one as a seller can significantly enhance the attractiveness of a property and provide peace of mind to buyers.
Benefits for Sellers- Competitive Edge: In a competitive market, a home warranty can set your listing apart from similar properties, especially for older homes.
- Reduced Post-Sale Liability: Warranties can help cover unexpected issues that arise after closing, potentially reducing the likelihood of disputes or legal action from the buyer.
- Protection During Listing: Many home warranties offer coverage during the listing period, protecting the seller against unexpected repairs while the house is on the market.
- Financial Protection: It offers a safety net against the high cost of repairing or replacing major systems (like HVAC, plumbing, electrical) and appliances (like the refrigerator or washing machine) after moving in.
- Peace of Mind: Buyers can feel more secure knowing they have a plan for unexpected breakdowns immediately following the purchase.
- Simplified Troubleshooting: When an item breaks down, the buyer contacts the warranty company, which handles dispatching a qualified service technician.
The home warranty should be explicitly mentioned in the listing and discussed during negotiations.
Aspect | Recommended Action | Notes |
|---|---|---|
Marketing Materials | Feature the home warranty prominently in property descriptions and brochures. | Include the name of the provider and the term length. |
Contract Integration | Ensure the home warranty is included as a specific term in the purchase agreement. | Specify who pays the premium. |
Provider Selection | Select a reputable provider with clear coverage and service terms. | Consider buyer preferences if possible. |
Documentation | Include a copy of the policy agreement for review. | File for policy documents |
Before offering a home warranty, review the following:
Scope of CoverageNot all warranties are the same. Be sure to clarify what is covered and what is excluded.
- Systems typically covered: HVAC, electrical, plumbing.
- Appliances typically covered: Refrigerator, oven, dishwasher.
- Exclusions: Pre-existing conditions (though some companies will cover unknown ones), structural defects, and certain components (e.g., specific water heater types).
The cost of a basic annual home warranty typically ranges between $400 and $600. The standard term is one year.
Service Call FeesBuyers will be responsible for a service call fee (typically $75-$125) each time they use the warranty. Ensure the buyer understands this cost.