Is A Home Warranty Required At Closing? Insights For Real Estate Agents

As a real estate agent, you guide clients through one of the most exciting (and sometimes stressful) chapters of their lives. As the sale nears completion, one question often arises: Is a home warranty required at closing? The answer can impact how smoothly the final stages unfold and how confident buyers feel walking into their new home.

Let’s explore how a home warranty for realtors plays a key role in finalizing the sale and why it’s worth considering.

What Is a Home Warranty?

A home warranty is a service contract that covers the repair or replacement of major household systems and appliances that may break down due to wear and tear. It typically includes systems like HVAC, electrical, and plumbing, as well as major appliances such as refrigerators, washers, and dryers.

Home warranties are offered as an optional extra in real estate transactions, but can be a point of negotiation during the deal. Home buyers and sellers may consider them as a safety net to cover unexpected costs after the sale is complete. 

While these warranties can be beneficial, the question remains: Are they necessary at closing?

Are Home Warranties Required at Closing?

In most real estate transactions, home warranties are not a mandatory part of the deal at closing. Buyers are not required to have one, nor are sellers obligated to provide one. 

That being said, there are some instances where a home warranty can be part of the contract or a seller’s concession, typically to attract buyers or as part of the negotiation process.

Some states or regions may see more frequent inclusion of home warranties due to local market norms or custom, but there is no national requirement for them at closing. It’s more about how the warranty is perceived and whether the parties involved see value in including it.

Why Do Buyers Consider a Home Warranty?

For many buyers, purchasing a home warranty can provide peace of mind after closing. This is especially true when buying an older home, where there may be concerns over the condition of appliances or systems.

Some reasons buyers might consider a home warranty include:

• Financial Protection: Home repairs can be costly. A warranty helps buyers budget by covering many of the unexpected repair costs that arise from household systems or appliances breaking down.
• Convenience: The home warranty provider typically coordinates repairs, so buyers do not need to vet contractors.
• Peace of Mind: Having a safety net can make the transition into a new home feel more secure.

While a home warranty is not required at closing, discussing the option with buyers shows you are invested in their long-term satisfaction.

Why Do Sellers Offer Home Warranties?

Home warranties can be just as beneficial for sellers. Offering one can help alleviate buyer concerns, speed up negotiations, or even increase the property’s appeal without requiring price reductions.

Here’s how a home warranty can benefit the seller:

• Attracting More Buyers: A seller-backed warranty can distinguish a listing from the competition and provide confidence to cautious buyers.
• Smooth Selling Process: If a major appliance breaks down shortly after closing, the warranty reduces the chance of post-sale complaints.
• Selling As-Is: Sellers who are unwilling to make repairs or bring significant concessions might offer a home warranty instead. This can allow the property to sell quickly without incurring additional costs for repairs or updates.

In each case, a warranty adds perceived value, even if a home warranty is not required at closing by law.

The Role of the Real Estate Agent

As a real estate agent, you must educate your clients—whether they are buyers or sellers—on the advantages and limitations of a home warranty. 

Since a home warranty is often seen as an extra, it’s not always top of mind during the negotiation process. However, by proactively discussing this option, you can help clients make informed decisions about including one in their offer or listing agreement.

Helping Buyers Make an Informed Decision

For buyers, you should provide information on what a home warranty covers and how it works. Be sure to explain the exclusions and the costs involved, which often vary based on the plan and the service provider. 

While many buyers might view a home warranty as an automatic addition, some may prefer to skip it and take their chances with repair costs. By knowing when to recommend a warranty and when to suggest alternatives, you’ll be able to guide your clients to the right choice.

Assisting Sellers in Negotiations

For sellers, a home warranty can be a useful negotiating tool, but it’s not always the right choice. For example, if your seller is delivering a home warranty as part of a competitive market strategy, you can use this to your advantage to sweeten the deal for potential buyers. 

Additionally, if your client is selling an older home or one that has had a lot of repairs over the years, a warranty can help alleviate concerns that the house might require extensive post-sale repairs.

However, make sure to clarify that not all home warranties are the same. Some may provide more extensive coverage than others, so you should assist your clients in selecting the right provider.

Cost Of Home Warranties: Who Pays?

While a home warranty can be included in the real estate transaction, the cost is another important consideration. Generally, the seller or the buyer can pay for the warranty. It can be negotiated as part of the deal, but it’s not unusual for the buyer to request that the seller cover the cost of the warranty, especially in a buyer’s market.

Home warranty costs depend on the coverage level and the provider. The payment can be made upfront or monthly, depending on the terms outlined in the agreement. Complete Appliance Protection, Inc. delivers month-to-month home warranty plans so you can cancel at any time and there's no obligation to pay for a full year upfront.

For agents, it’s important to keep in mind that the cost of a home warranty could influence a buyer’s or seller’s decision, so it’s critical to evaluate the overall transaction costs when discussing the warranty.

The Potential Pitfalls of a Home Warranty

• Exclusions and Limitations: Many warranties have exclusions that may not cover all parts of a system or appliance. Be sure to read the fine print so that your clients understand what is and is not covered.
• Service Fees: Most home warranty companies charge service fees for each repair request, which can add up over time. Complete Appliance Protection, Inc. is a great alternative, as we don't charge a deductible or service call fee. We pay 100% of the approved repair costs, parts, labor, and service call fee.
• Unclear Coverage: Some buyers might expect the warranty to cover all issues. However, it’s important for them to be clear on the specific terms and conditions. Misunderstandings can lead to dissatisfaction later on.

As a real estate agent, being upfront about these pitfalls will help set realistic expectations for both buyers and sellers.

Protect Your Clients with Complete Appliance Protection, Inc.

As a realtor, your job extends beyond closing the deal; it's about building lasting relationships and offering valuable guidance. Complete Protection™ Home Warranty is the perfect tool to show your clients that you truly care about their long-term investment. 

By recommending a home warranty, you can bring peace of mind to first-time homeowners and ease their concerns about unexpected repair costs. With plans tailored to fit every need, Complete Appliance Protection, Inc. can help you build trust and grow your customer base. 

Enroll today and provide your clients with the confidence they deserve.