3 Sound Reasons Why You Should Offer a Home Warranty
When you’re selling a home, a home warranty can do more than provide coverage for the buyer after closing. Depending on the plan, it may also offer protection for certain systems and appliances while your home is listed, give buyers added reassurance about unexpected repairs, and provide another option during negotiations. It isn’t necessary for every sale, but there are several reasons it may be worth considering.
A home warranty is an optional service contract that may help pay to repair or replace certain home systems and appliances when they fail from normal use. Depending on the plan, coverage may include heating and cooling equipment, plumbing and electrical systems, water heaters, and major appliances.
Home warranty plans vary considerably, so coverage isn’t automatic simply because something breaks. Contracts have their own covered items, exclusions, limits, service fees, and other requirements. That’s why it’s important to understand the particular plan you’re considering and what role you want it to play in your home sale.
For sellers, there are three reasons a home warranty may deserve a closer look.
1. IT MAY PROTECT YOU WHILE YOUR HOME IS LISTED
One of the more interesting benefits for sellers happens before the buyer ever takes ownership. Some home warranty companies offer seller or listing-period coverage for certain systems and appliances while the property is on the market. Depending on the provider and plan, this coverage may be available at little or no upfront cost when buyer coverage is purchased at closing.
That can be useful because selling a home doesn’t stop things from breaking. An air conditioner can quit during a hot week of showings. A dishwasher can stop working after you’ve accepted an offer. A water heater can fail shortly before closing.
If the problem qualifies for coverage under your seller plan, the warranty may help with an eligible repair or replacement, subject to the contract’s service fees, limits, and exclusions. That could be particularly valuable when you’re already spending money preparing for your move and don’t want an unexpected repair added to the list.
Seller coverage isn’t offered by every company or under every plan, so this is something to investigate rather than assume. If it’s available, however, it can give you a benefit from the warranty while you still own the home.
2. IT CAN GIVE THE BUYER ADDED REASSURANCE
Buyers often spend a significant amount of their available cash on the down payment, closing costs, moving expenses, and getting settled into their new home. An unexpected repair shortly after closing may be the last expense they want to face.
A seller-provided home warranty doesn’t guarantee that nothing will go wrong, and it should never take the place of a buyer’s home inspection. What it can do is give the buyer another resource if an eligible covered system or appliance fails after closing.
That may be particularly reassuring when the home has older systems or appliances that are functioning properly but naturally have some years behind them. A buyer may still wonder, “What happens if the furnace or air conditioner stops working six months after I move in?” Knowing that certain eligible repairs may have warranty coverage can help answer part of that concern.
It may also be helpful after the sale. If a covered appliance or system fails shortly after the buyer moves in, the warranty provider gives the new owner somewhere to turn for service rather than leaving the buyer wondering what to do next. It doesn’t eliminate every possible disagreement or expense, but it can make some unexpected problems easier to address.
3. IT CAN BECOME PART OF YOUR MARKETING OR NEGOTIATION STRATEGY
A home warranty isn’t likely to be the reason someone falls in love with your house, and there’s no guarantee that offering one will produce a faster sale or a higher price. But it can be one more item of value you bring to the transaction.
Depending on your market and the home you’re selling, you might offer a buyer warranty when the property is listed, add one later if buyer concerns arise, or use it as part of an offer or counteroffer. If a buyer likes the home but is concerned about the age of certain functioning systems or appliances, a warranty may help address some of that uncertainty without requiring you to replace something that is currently working properly.
There may also be situations where a buyer requests a home warranty as part of an offer. In that case, the cost becomes one more term to evaluate along with the purchase price, closing date, concessions, contingencies, and other conditions. Sometimes agreeing to provide the warranty makes sense. Other times, another negotiating approach may be more valuable to you.
WHAT DOES A HOME WARRANTY COST?
Home warranty prices vary by provider, location, property, coverage level, and optional add-ons. Plans may be paid monthly or annually, and service fees are typically charged when a technician is dispatched for a claim.
Rather than choosing a warranty based only on price, compare the actual coverage. Look at which systems and appliances are included, coverage limits, exclusions, service fees, claim procedures, any maintenance requirements, treatment of pre-existing conditions, and other contract terms.
If seller coverage is important to you, find out whether it’s available, what it covers during the listing period, when that coverage begins and ends, and whether purchasing buyer coverage at closing is required.
DOES OFFERING A HOME WARRANTY MAKE SENSE FOR YOUR SALE?
Maybe. Like most decisions involved in selling a home, it depends on the property, the market, and what you’re trying to accomplish.
If your home has older but functioning systems, seller coverage could be useful while the property is listed. A buyer warranty may provide some added reassurance after closing. And during negotiations, the warranty can become another option for addressing a buyer’s concerns without automatically replacing something that is still doing its job.
Before deciding, let’s look at the age and condition of your home’s major systems and appliances, what’s happening in your local market, and the terms and cost of the warranty you’re considering. I can help you determine whether a home warranty adds meaningful value to your particular selling strategy—or whether your money would be better spent somewhere else.
