Home Warranty When Selling: Should You Offer One to Buyers
A home warranty can be a smart selling tool that gives buyers confidence and protects you from unexpected repair requests after closing. But is it worth the cost, and when does it make the most sense?
Understanding how home warranties work and how they benefit both sellers and buyers helps you make an informed decision about including one in your sale.
What Is a Home Warranty?
A home warranty is a service contract that covers the repair or replacement of major home systems and appliances that break down due to normal wear and tear. Coverage typically includes:
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li>Heating and cooling systems (HVAC)
- Plumbing systems
- Electrical systems
- Water heater
- Kitchen appliances (refrigerator, oven, dishwasher, microwave)
- Washer and dryer
- Garage door opener
- Ceiling fans
Home warranties are different from homeowners insurance, which covers damage from events like fire, theft, and natural disasters. A warranty covers mechanical failures from normal use.
Benefits of Offering a Home Warranty When Selling
Buyer Confidence
A home warranty reassures buyers that they will not face unexpected repair costs immediately after moving in. This is especially appealing to first-time buyers who may be anxious about the financial responsibility of homeownership.
Reduces Post-Sale Disputes
Without a warranty, buyers may contact you months after closing with complaints about a broken appliance or failed system. A warranty shifts that responsibility to the warranty company, reducing your liability and stress.
Marketing Advantage
In competitive markets, offering a home warranty can differentiate your listing from others. The phrase "home warranty included" in your listing description catches buyers' attention.
Higher Sale Price Potential
Some studies suggest that homes sold with a warranty sell for slightly more than those without, as buyers perceive added value and are willing to pay a premium for the protection.
Cost of a Home Warranty for Sellers
A standard home warranty for sellers typically costs between $400 and $600 for one year of coverage. The cost varies based on the plan level, the size of the home, and the warranty provider.
Consider this a marketing expense. The cost is usually modest compared to the potential benefits of a faster sale, fewer disputes, and buyer goodwill.
When a Home Warranty Makes Sense
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li>Older Homes: If your home has aging systems or appliances, a warranty can ease buyer concerns about upcoming repairs.
- Competitive Market: Offering a warranty can help your listing stand out when buyers have many options.
- First-Time Buyer Target: First-time buyers often appreciate the safety net a warranty provides.
- Known Issues: If you are aware that certain systems are aging but still functional, a warranty protects both you and the buyer.
When a Home Warranty May Not Be Necessary
- New Construction: New homes typically come with builder warranties, making an additional warranty redundant.
- Recently Renovated Homes: If you have recently updated major systems, they may still be under manufacturer or contractor warranties.
- Strong Seller's Market: In a market with high demand and low inventory, buyers may not expect a warranty.
How to Choose a Warranty Provider
- Compare coverage plans and exclusions from multiple providers.
- Read customer reviews and check complaint history with the Better Business Bureau.
- Understand the claims process and response times.
- Verify that the provider is licensed and insured in your state.
- Ask your real estate agent for recommendations based on experience.
How to Present the Warranty to Buyers
Include the warranty information in your listing description and disclosures. Your agent can highlight the warranty during showings and in marketing materials. Some sellers even provide a copy of the warranty plan details so buyers can review the coverage before making an offer.
Frequently Asked Questions
How much does a home warranty cost when selling?
Sellers typically pay between $400 and $600 for a one-year warranty. The cost varies by provider, plan level, and home size.
Does a home warranty cover pre-existing conditions?
Most warranties cover systems and appliances that are in working order at the time of purchase. Some providers have a waiting period, while others offer immediate coverage.
Can the buyer purchase their own warranty?
Yes, buyers can purchase their own warranty at any time. However, offering one as part of the sale is a stronger selling point because it shows you are invested in the buyer's satisfaction.
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