Selling a home: Should you offer buyers a warranty?

If you're selling a home, consider offering buyers a home warranty as a way to promote interest and confidence. (Photo courtesy of Angie's List member Erin T.)

If you're selling a home, consider offering buyers a home warranty as a way to promote interest and confidence. (Photo courtesy of Angie's List member Erin T.)

If you're selling a home, consider buying a home warranty. It can be a great marketing tool, especially in a challenging market.

Why should the seller buy the warranty?

You're more likely to sell a house with a home warranty than you are without a warranty. In a challenging market, you need every advantage you can to garner interest in your home. Especially for first-time home buyers, the cost of future repairs can be a concern. Most home warranties cost around $300 to $500 and last for a year after the closing date. Offering a home warranty with the purchase can increase a buyer's confidence in choosing your home.

When you purchase a seller's home warranty, it should include coverage on your home while it's on the market. The warranty would then be transferred to the buyer for one year of coverage beginning on the closing date of the sale.

What's included?

A home warranty is not an adequate substitute for insurance but can help with costs if appliances or major home systems fail in some way. The details of what's covered vary according to the specific plan you buy. Generally, though, a basic home warranty covers systems including heating and cooling, plumbing and electrical systems, and appliances such as water heater, dishwasher, stove, garbage disposal and a built-in microwave oven.

Each warranty company offers different packages. It's important to read all terms before signing anything. Know what's covered and what's not. Upgrades can be made to cover other appliances, including washer, dryer, refrigerator or garage door opener. Ask about coverage options for a hot tub, pool, septic system or stand-up freezer.

What's not included?

Warranty companies require that you perform regular maintenance to appliances and systems. If something stops working as a result of improper maintenance, it likely won't covered under the terms of the warranty. Each appliance will be covered up to a certain amount or replaced with an appliance of the same size and efficiency. However, a more expensive brand-name appliance may be replaced with a cheaper option of the same size and efficiency.

Warranties will generally fix a problem without replacing any items or parts of the house that were damaged because of the breakdown. For example, a plumbing leak may damage flooring, but the warranty will fix the leak, not necessarily repair the  floor. Also note that the home warranty won't cover appliances still under a manufacturer warranty.

You're responsible for making sure that your systems and appliances are in working order. The warranty company may require you to repair or upgrade an appliance before it agrees to cover the appliance in the warranty.

Do your homework

Offering a home warranty as a seller makes your home a more appealing option for buyers. If you decide to include a warranty, research the reputation of a few warranty companies before spending money.  Check out reviews on Angie's List to determine which warranty companies have the highest ratings in your city.

Be aware that:

For more information, see the Angie's List Guide to Home Warranties.

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