home sale transaction

Home Warranty Benefits For Buyers And Sellers

Home service contracts, also referred to as home warranties in the real estate industry, provide guarantees to protect homeowners from unexpected repair or replacement costs for the major appliances and systems in a home. Home warranties should not be confused with another kind of warranty offered by home builders which guarantees the quality of a builder’s new-home construction.

Although coverage options can vary, home warranties typically cover major appliances like refrigerators, washers, and dryers. They could also include items such as heating, air-conditioning, pool and spa equipment, electrical systems, and garage door openers. Unlike insurance, no deductible is paid for home warranty coverage. Insurance is designed to cover dollar loss for damage or liability but not wear and tear, which is what home warranties cover. As a result, home insurance and home warranties are very complimentary serving these important and different needs. Warranty contract fees will vary across providers and regions, but you can expect to pay around around $400 to $550 per year for a basic contract. Yearly contracts are most common, although some services offer monthly contracts.

Buyer Benefits

How many buyers are excited about buying a home with a furnace or some other big-ticket item that looks like it’s gasping its final breaths? Everything else about the house is great, but the risk of those few big things looms over their heads. Home warranties address these concerns for buyers so they can purchase with confidence, knowing they’ll have no out-of-pocket expense if one of those big, expensive items needs repair or replacement. Buyers also have the option of extending the service contract when the contract is due to expire. Just knowing they will have the option of doing this provides additional peace of mind.

Seller Benefits

Once a home is listed, everything about it will receive close attention from agents and the buyers they’re working with. Sellers will often offer 6 months or a year of home warranty coverage to be included in the sale, which helps sweeten the deal for prospective buyers. This is especially effective and valuable for older homes that are more likely to need repairs and replacements for the kinds of things covered in home warranties. Sellers don’t want buyers asking for price reductions because they feel threatened by costly repairs or replacements. And they certainly don’t want post-sale headaches caused by buyers asking for repair or replacement reimbursement. Including a home warranty with a sale helps ensure cleaner transactions and gives sellers peace of mind, too.

Researching Your Options

If you’re thinking about getting a home service contract, the National Home Service Contract Association is a non profit industry trade organization of member companies serving home service contract providers and consumer interests throughout the United States. Their website has a section for consumers to help you learn about home warranty options and how to shop for a plan.


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