When preparing to sell a home, one strategic decision many homeowners face is whether to include a warranty as part of the sale package. Home Sellers Offer a Home Warranty as a service contract, separate from homeowner’s insurance, that covers the repair or replacement costs of major home systems and appliances when they break down due to normal wear and tear.

This can include items like HVAC systems, plumbing, electrical components, kitchen appliances, and even certain structural elements, depending on the plan. The coverage typically lasts for a set period, often one year after closing, but sellers can sometimes activate it while the property is still on the market to provide added protection during the listing period.

Offering a home warranty for home sellers can be a powerful marketing tool, especially in markets where buyers have plenty of options. It reassures potential buyers that if a covered item fails soon after purchase, they will not be solely responsible for costly repairs or replacements. This can also reduce the likelihood of last-minute price negotiations or repair demands that sometimes arise during inspections.

A warranty For older homes or those with aging appliances and systems, can help offset buyer concerns about maintenance expenses, making the property more appealing. However, not all sellers will find the investment equally valuable. Factors like the home’s condition, the competitiveness of the local market, and the cost of the warranty itself should all be considered before making the decision. In this guide, we will take a closer look at the advantages, drawbacks, and key considerations so sellers can make an informed choice.

According to a study by the National Association of Realtors (NAR), homes sold with a home warranty are 16% more likely to close compared to those sold without one.

Understanding a Home Warranty

A home warranty is a service contract designed to protect homeowners from the high costs of repairing or replacing major home systems and appliances that fail due to normal wear and tear. Unlike homeowner’s insurance, which covers damage caused by unexpected events such as fire, storms, or theft, a home warranty focuses on the functionality of the home’s essential components. 

Most standard plans cover items like heating and cooling systems, water heaters, plumbing and electrical systems, and kitchen appliances, while optional coverage can include pools, spas, septic systems, or even roof leaks. Coverage typically lasts for one year, but renewal options are often available, and sellers can choose to start the coverage during the listing period to provide peace of mind for both themselves and potential buyers. 

The cost of a home warranty varies depending on the provider, the level of coverage, and any additional items included, but it is generally considered an affordable way to mitigate the risk of large, unexpected repair bills. Understanding the specifics of what is and is not covered is crucial, as most plans have limits, exclusions, and service call fees that determine how much the homeowner will pay out of pocket when a claim is made.

Why Home Sellers Might Offer a Home Warranty

Offering a home warranty when selling a property can make it more appealing to buyers and help the transaction go more smoothly. One of the biggest advantages is that it builds buyer confidence by giving them peace of mind that major repairs will be covered if something breaks down after they move in. This reassurance is especially important for older homes or those with appliances and systems that are not brand new. A warranty can also help your home stand out from similar listings, which can be a big advantage in slower markets where buyers have plenty of options.

Another benefit is that it can help avoid repair disputes. Buyers may be less likely to request repairs or price reductions after the inspection if they know a warranty will take care of many potential problems. This can reduce last-minute issues that sometimes slow down or derail a sale. Home Sellers Offer a Home Warranty to speed up the selling process, as buyers who feel more secure about their purchase are often quicker to make an offer.

Some warranty plans start coverage while the home is still on the market, which means sellers can also protect themselves from unexpected repair costs before closing. For a relatively small investment, a home warranty can attract more interest, strengthen buyer trust, and make the entire selling process easier.

Possible Drawbacks for Sellers

Homeowners often recommend prioritizing planning and setting aside funds for routine maintenance and unexpected emergencies, while also weighing the pros and cons of a home warranty as an additional layer of protection. The most obvious is the added cost, which the seller typically pays for at closing. Depending on the coverage and provider, this can range from a few hundred to over a thousand dollars, which may not always be worth the expense in a hot market where homes sell quickly. 

Another drawback is that a warranty may not have as much impact if the property is newer or in excellent condition, since buyers might not see the same value in the coverage. Additionally, every home warranty comes with limitations and exclusions, and if a covered item fails but the repair is denied, it could lead to buyer disappointment or frustration after the sale, potentially reflecting back on the seller. 

Some buyers may also prefer a price reduction or repair credit instead of a warranty, giving them more control over how issues are handled. For these reasons, sellers should weigh the cost and potential risks against the likely benefits before deciding to offer a home warranty.

Tips for Sellers Considering a Home Warranty

If you are considering offering a home warranty when selling your home, there are several steps you can take to make sure it benefits both you and your buyer. Start by researching well-established warranty providers with strong reputations for customer service and prompt claims handling. 

Reading reviews, checking ratings from organizations like the Better Business Bureau, and asking your real estate agent for recommendations can help you choose a reliable company. Take the time to fully understand the plan’s coverage, including which systems and appliances are protected, the dollar limits for repairs or replacements, and any exclusions. For example, many plans do not cover pre-existing conditions, cosmetic damage, or certain high-end brands unless you pay for an upgraded package.

If your home has older systems such as a 15-year-old HVAC unit or original kitchen appliances, look for a plan that includes enhanced coverage for these items, as they are more likely to fail and could be a concern for buyers. Some providers also allow you to start coverage during the listing period, which can protect you from paying out of pocket if something breaks before closing. This can be a strong selling point to mention in your listing description or during showings.

When presenting the warranty to buyers, explain clearly how it works, what it covers, and the benefits it provides for them in the first year of ownership. Home Sellers Offer a Home Warranty to build trust, reduce buyer hesitation, and even encourage stronger offers. By selecting the right plan and communicating its value, you can turn a home warranty into a practical and appealing selling tool.

Conclusion

In conclusion, whether Home Sellers Offer a Home Warranty depends on the property’s condition, the local market, and the seller’s overall goals. A well-chosen warranty can give buyers peace of mind, make a home stand out from the competition, and even help avoid disputes that might delay closing.

It is particularly valuable for older homes or those with systems and appliances that may be nearing the end of their lifespan, as it can reassure buyers about potential future repair costs. However, the cost to the seller, the limitations of coverage, and the buyer’s preferences should also be weighed carefully. By researching reputable providers, understanding the specifics of coverage, and presenting the warranty as a meaningful benefit, sellers can decide if it’s the right tool to enhance their listing and support a smoother, more confident sale.