Home Warranty Cost For Sellers: What To Expect
Selling a home can come with its fair share of challenges, from negotiations to dealing with unexpected issues that might arise during the process. One way sellers can make the process smoother is by offering a home warranty to potential buyers. Home warranties help cover the cost of repairs or replacements for major appliances and systems, providing peace of mind to both the seller and the buyer. But how much does a home warranty cost for sellers, and what factors contribute to these prices?
A home warranty is a service agreement that covers the repair and replacement costs of household systems and appliances due to normal wear and tear. Sellers may choose to purchase a home warranty to safeguard their property during the listing period or as an added incentive for buyers.
By offering this protection, sellers demonstrate to buyers that they have taken extra steps to ensure the home is in good condition, thereby reducing the worry of unexpected repairs after purchase.
What Does a Home Warranty Cover?
Before examining the costs, it’s essential to understand what a home warranty typically covers. These plans vary in coverage, but they often include essential home systems such as HVAC, plumbing, and electrical systems, as well as common appliances like refrigerators, dishwashers, and washers and dryers.
Generally, a home warranty does not cover damages caused by neglect, misuse, or natural disasters. It focuses on the normal wear and tear of household items.
Why Would a Seller Want to Purchase a Home Warranty?
As a seller, offering a home warranty can give your listing a competitive edge in a crowded market. Buyers may be more inclined to choose a home with an active warranty, knowing that they won’t have to worry about unexpected repair costs in the first year. For sellers, it also means fewer obstacles during the home inspection process. If a breakdown occurs before or during the inspection, a home warranty offers that repairs can be made quickly, preventing the deal from falling through.
Additionally, offering a home warranty helps establish trust with buyers. They know that major appliances and systems are covered if they fail within a short period after they move in. It also helps sellers avoid the hassle of dealing with repairs themselves if something breaks while the house is on the market.
What Affects Home Warranty Prices for Sellers?
The annual cost of a home warranty for a seller can range from $300 to $700, depending on various factors. The main elements that influence the price include:
- Coverage Options: Some plans cover basic appliances and systems, while others offer more comprehensive protection. The more items included in the warranty, the higher the cost.
- Home Size and Age: Larger homes with more systems and appliances to cover typically cost more. Older homes may also increase the price due to the higher likelihood of system failures.
- Location: The region in which the home is located can affect pricing. Areas with higher living costs or more expensive labor rates may see higher warranty costs.
- Additional Coverage: Some sellers opt to add extra coverage for items such as pool systems or septic tanks. While this can increase the overall price, it offers more comprehensive protection for both the seller and buyer.
What Does a Seller’s Home Warranty Typically Cost?
On average, the cost of a seller’s home warranty plan can range from $300 to $600. This is typically for a basic coverage plan, which includes major appliances and systems like HVAC, plumbing, and electrical. Many sellers may also be offered a discounted or complimentary warranty if they agree to purchase a home warranty for the buyer upon closing the deal. This arrangement offers peace of mind to both parties, and it can be an attractive selling point.
If you are purchasing a warranty specifically for the buyer, you can expect to pay between $39 and $63 per month. For an annual payment, the cost may range from $400 to $700. Sellers can often negotiate this pricing with warranty providers, so it’s a good idea to shop around and obtain quotes from multiple companies to ensure you're getting the best deal for the level of coverage you need.
Can You Get a Free Seller’s Warranty?
Many home warranty companies offer free or discounted warranties to sellers, but this typically comes with a stipulation: the seller must agree to purchase a full buyer’s warranty once the home sale closes. This can be a good deal for both the seller and the buyer. The seller benefits from the protection during the listing and inspection period, and the buyer receives a full year of coverage after the sale.
This offer is common among companies that sell both seller and buyer home warranties. However, some companies may only offer limited coverage for the seller during the listing period; therefore, it’s essential to carefully read the terms of the offer. The seller is typically responsible for paying the warranty premium, while the buyer will assume the service call fees once the sale is complete.
What Are the Benefits of a Seller’s Home Warranty?
Offering a home warranty is a strategic decision that can benefit the seller in several ways. First and foremost, it can reduce the likelihood of the sale falling through due to unexpected repairs. If something goes wrong during the listing period, the warranty makes sure that repairs are made promptly, without causing delays in the transaction.
A home warranty also enhances the property's appeal, making it stand out in a competitive real estate market. Buyers are often more comfortable purchasing a home with the added security of a warranty, knowing that they will not face immediate out-of-pocket expenses for appliance and system repairs. The warranty helps sellers gain an edge over other properties that may not offer this coverage.
Moreover, offering a warranty can streamline the home inspection process. If a system or appliance breaks down during the inspection, a warranty will cover the repair or replacement, avoiding renegotiations or the need for the seller to make repairs themselves. This can expedite the sale and reduce the risk of delays.
How Do You Get a Seller’s Home Warranty?
Obtaining a home warranty as a seller is a relatively straightforward process. Most home warranty companies work with real estate agents to offer warranties to sellers. It’s a good idea to discuss the option with your agent before listing your home, as they may already have relationships with certain providers.
Once you’ve decided to purchase a warranty, you’ll need to choose the level of coverage that best suits your home. Consider factors like the age of your appliances and systems, as well as the location of your home, when making this decision. You may also want to inquire about coverage caps, which limit the amount the warranty will pay for specific repairs or replacements.
After purchasing the warranty, you will typically receive a contract detailing the terms of the coverage, including the start and end dates. Be sure to review the contract carefully to understand the specifics of what is and is not covered.
Should You Offer a Home Warranty in a Seller’s Market?
In a seller’s market, where demand for homes exceeds supply, sellers may not need to offer additional incentives to attract buyers. However, even in such a market, offering a home warranty can still be a smart move. It shows buyers that you are proactive about maintaining the home and offers a smoother transition after the sale.
While a home warranty might not be as essential in a seller’s market, it can still differentiate your listing from others. If you want to make your home more attractive and reduce the chances of delays or disputes during the closing process, offering a home warranty is a good way to go.
What Are the Limitations of a Seller’s Home Warranty?
While a home warranty can offer great value, it is important to understand its limitations. A seller’s warranty typically only covers repairs and replacements resulting from normal wear and tear. It will not cover damages caused by neglect, misuse, or environmental factors such as floods or earthquakes. Additionally, some warranties may have coverage caps, meaning that the provider will only pay up to a certain limit for repairs or replacements, with the seller responsible for any costs that exceed the cap.
It is also important to note that not all systems and appliances are included in every home warranty plan. Some sellers may need to purchase add-on coverage for certain items like pools, spas, or septic systems. If these are essential parts of your property, be sure to ask about adding them to the warranty plan.
Finally, while home warranties can cover repairs during the listing period, they typically do not cover pre-existing issues with the home. If an appliance or system is already faulty or nearing the end of its useful life, it may not be covered under the warranty.
Let Complete Protection™ Take the Worry Out of Your Sale
Complete Protection™ understands that selling a home can be stressful. That’s why we offer home warranty plans designed to give you peace of mind during the selling process. With no deductible and customizable coverage options, we ensure your home is protected without hidden surprises. If you're looking for a straightforward solution to help keep your sale on track, Complete Protection is here for you.
If you have any questions about our home warranty services, please don't hesitate to contact us today.