A home warranty pays repair or replacement costs for the mechanical systems and built-in appliances that break down in a home. Warranties can be purchased by either the buyer or seller. When the seller is paying for the warranty, it is usually paid for and goes into effect at or before closing. The coverage period is normally one year. There are a lot of companies offering home warranties and coverage of individual policies can vary widely. Usually, central heating and air conditioning systems, electrical, plumbing and major appliances are covered. It’s important that you read the policy closely and understand what is and is not covered. The cost for a one-year home warranty typically runs between $300 and $600, depending on the size of the home and the specific types of coverage. In addition to the policy premium, there is normally a deductible of $50 – $100 to pay when making a repair claim.
There are some very good reasons to pay for a home warranty when selling your home. Providing a warranty may help set your home apart from the competition. Buyers will appreciate having a warranty and will feel more comfortable about buying your home without worrying about hidden problems. Providing a warranty can even result in a higher price, offsetting the cost. Certainly it can make it easier for a buyer to make an offer. These assets make the home warranty an excellent marketing tool.
In addition to the marketing advantages. As a seller you may also be covered under the policy for repairs during the listing contract.
If you are buying a home and it doesn’t come with a warranty, you may want to consider paying for one yourself.
If a home warranty is not being included as part of the sale of the home consider negotiating it into the sales price after determining if the prospective home can use it.