Why You Should Offer a Home Warranty when Selling a House

Offering a home warranty when selling a house is a great way to garner interest in your property. (Photo by Summer Galyan)

Offering a home warranty when selling a house is a great way to garner interest in your property. (Photo by Summer Galyan)

If you're selling a home, offer a home warranty along with the sale. It can be a great marketing tool, and potential buyers will appreciate the peace of mind a home warranty can bring.

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. A home warranty will garner interest in your home, especially from first-time home buyers, who might be concerned about future repair expenses. Most home warranties cost $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 buy 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 the same as homeowner's insurance. But it 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, and appliances such as water heater, dishwasher, stove, garbage disposal and a built-in microwave oven.

Read more: Why home warranties are no guarantee

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 the washer, dryer, refrigerator or garage door opener. Ask about coverage options for a hot tub, pool, septic system or stand-alone freezer.

What's not included?

Warranty companies require that you perform regular maintenance on 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 house items or parts 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 working. The warranty company may require you to repair or upgrade an appliance before it agrees to cover the appliance in the warranty.

Research the home warranty company

Offering a home warranty may make your home more appealing to buyers. If you decide to include a warranty, it's important to research the reputation of a few warranty companies to make sure you're buying the best possible product.

For several years, home warranty companies topped the most-complained-about service categories on Angie's List. A majority of complaints stemmed from the homeowner's misunderstanding of what exactly was covered by the warranty, and to what extent. Avoid buying a home warranty from any company that's vague about the circumstances under which it will cover a claim.


Editor's note: This is an updated version of a story originally posted on Oct. 19, 2012.


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