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But, your insurance won’t do much if your appliance breaks from normal wear and tear. Selling a home is stressful enough, so you don’t need to add any unexpected repair costs on top of your list of things to worry about. Whether it’s your air conditioning system or your dishwasher, the right home warranty plan will protect you financially from huge home repair bills. This option tends to cost a bit more, but these plans cover pretty much everything in your home, with some exceptions, such as a pool, or septic system. If you want even more coverage, you can usually get optional add-ons for these items to protect your investment even further and entice potential buyers. So, here’s everything you need to know about coverage options for the home you’re trying to sell, as well as our home warranty reviews of the best plans available to you.
So, a warranty is a good way to get more comprehensive coverage for your home should something serious arise during the selling process. While we all hope that our new home buyers are happy with their decision to invest in our house, disputes can arise after closing if an appliance or system breaks unexpectedly. However, with a home warranty, your buyer can simply reach out to the home warranty company to request a service call instead of contacting you to deal with an issue. True, in buying the seller’s home warranty, you might be spending money on something you’ll never need or use. In a way, its main function is to provide peace of mind throughout the real estate journey — one less thing to stress over in an often stress-filled endeavor.
Covers What Homeowners Insurance Won’t
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. We are an independent, advertising-supported comparison service. The realtor.com® editorial team highlights a curated selection of product recommendations for your consideration; clicking a link to the retailer that sells the product may earn us a commission. After all, lots of things you buy come with a warranty in case they break down, from cars to smartphones.
A seller’s home warranty starts when you list your house up at the end of a sale. What makes it worthwhile is the fact that it covers all systems, and appliances, whose individual companies’ warranties are probably long overdue by the time of sale. For the most part, home warranties that you can get for a home are the same whether you’ve owned the house for a while or if you’re selling yours for the first time. While some companies will offer special deals and terms to home sellers, most will provide the same coverage for your house regardless of where you are in the real estate process. Thankfully, many top home warranty companies offer protection against inspection issues in their plans for sellers. That way, you can focus more on applying for a mortgage or searching for a new house and less on the home you’re trying to sell.
What is a home buyer warranty?
You pay a monthly or annual amount called a premium that transfers the risk of facing unexpected home systems or appliance breakdowns to the company. The second component of the home warranty cost is the deductible, a small part of the claim that you as the claimant agree to pay. The cost of optional add-ons is a part of the premium payment.
This will give you an idea as to which warranty plan option would be most cost-effective. Some companies charge high premiums by offering a variety of adjunct services including special home appliance purchase discounts, higher coverage cap, workmanship guarantee, etc. The optional item premiums and coverage caps are set accordingly.
Your Ability to Pay Out of Pocket
But not everyone thinks home warranty companies are worth the cost. Typically a warranty isn’t necessary with new homes, since most of the appliances are already covered under manufacturers’ warranties. But in general, the older your home, the greater the odds that something’s bound to break, and the wiser it is to get a home warranty. Not all home warranty companies differentiate between newer and older homes in terms of cost, making a warranty an especially cost-effective option if you are purchasing an older home. “Getting a home warranty when you list your home for sale is a no-brainer because there’s no additional cost to the seller.
Total protection plans are sometimes called combination plans, gold plans, or platinum plans. Some companies also offer add-on areas of coverage for an additional fee. This could include pools, smart home systems, and garage door openers. Other plans also offer coverage for these additional areas in the total protection plan. Always ask for a detailed list of what is included to be sure of your coverage.
A home warranty provides your buyer with peace of mind about their purchase.
Research the company’s reputation—When searching for a provider, look for one that has at least a B rating from the Better Business Bureau . Read other third-party customer reviews, such as Yelp and Google Reviews, to get a good idea of what it’s like to work with that home warranty company. Your real estate agent may also have a working relationship with a home warranty provider. They often don't cover repairs due to pre-existing issues with appliances.
You'll be able to choose which systems and appliances you want to be covered. This is a great opportunity to cover only older and/or costly systems. And if you choose to take certain appliances with you, such as a microwave or washer and dryer, you can omit it from your home warranty coverage. Sometimes home warranties are lumped into the closing costs for a real estate transaction and closing costs are typically paid for by the buyer. Buyers will sometimes ask the seller to pay for some or all of the closing costs, but sellers are only responsible for these costs if they agree to these terms.
Information you see on our site may be different from what you may see on the service provider site, as their information may vary by state. Unfortunately, the IRS will not allow you to deduct the cost of a home warranty as a selling expense when computing the gain/loss on a sale of your home. Get free, objective, performance-based recommendations for top real estate agents in your area.
Find out the annual premiums or monthly costs of different home warranty companies. Choose one that offers the coverage you want within your budget. Home buyer warranty is similar to a typical home warranty, but it’s especially designed for new owners who might not know the condition of their house’s systems and appliances. This type of policy also covers any misuse or deferred maintenance from the seller. The cost of a modular home warranty is $500 to $1,500 for a 10-year structural warranty. Modular home warranties are different from standard home warranties.
A seller’s home warranty protects you during the listing period and can help you save on repair requests. If the buyer opts not to accept, the warranty is then canceled at no cost to the seller. If the buyer accepts the transfer, the cost of the policy typically comes out of the seller’s proceeds.
The third covers systems and appliances with the exceptions already listed. Their top-tier plan covers all systems and appliances, including areas exempt from their lower-tier plans. The cost of First American home warranties averages $28 to $42.50 a month. First American also generally charges a flat rate service fee of $75.
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