From my experience as a Realtor this question is brought up all the time from both home buyer’s and seller’s.
Most real estate agents recommend a home warranty or protection plan when selling a house to give the buyer peace of mind and increase the odds of selling quicker.
What Are The Benefits of Offering a Home Warranty/Protection Plan
When selling your house offering a home warranty or protection plan will give you a 29% better chance of selling than someone who doesn’t. Statics also show that your house has a 15% chance of selling faster than a house without a home warranty.
Just think of the peace of mind a prospective buyer will have knowing that a one year home warranty comes with the purchase of their house. The buyer just spent a bunch of money on a new house, they don’t need to worry about unexpected repairs, a busted water heater or an a/c that’s not cooling well.
There is a lot of confusion when it comes to home warranties because of the variety of companies who sell the coverage and differences in what is covered. Most home warranties cover major appliances, water heaters, electrical, minor plumbing, heating and air conditioners. Some companies like Old Republic will cover minor roof damage for an extra fee.
The buyer also has the option of addition coverage like pool pump, well, septic, extra refrigerator, etc. American Home Shield allows the buyer to add additional coverage up to 90 days after purchasing the house.
Below is a list of common home warranty companies as well as plan names and cost. Most people buy the mid-range plans because it covers all the major appliances as well as the heating and cooling systems.
| Home Warranty Company | Plan | Cost | Service Fee |
| American Home Shield | Shield Plus | $600 | $75 |
| Broward Factory Service | Deluxe | $550 | $55 |
| Old Republic Home Protection | Ultimate | $525 | $100 |
| First American Home Warranty | Eagle Premier | $530 | $75 |
| Select Home Warranty | Platinum | $449 | $60-$75 |
Just like any other warranty or insurance there are pros and cons to every company and coverage. Here’s an excellent article from ConsumerAffairs about plans and coverage.
Who Orders and Pays for the Home Warranty
Your Realtor or brokerage will order the warranty plan that you decide on. The warranty company will send a confirmation email with the details of the plan. You and the title company will receive a copy of the plan and an invoice. The warranty is not paid or does not become active until the house has sold.
When selecting a company your Realtor will have a couple companies they work with and trust. You can also talk to your friends, relatives or do some research yourself. I wouldn’t spend too much time on this, the companies are basically the same and it’s for the prospective buyer.
Condos, town houses and mobile home coverage fees are usually less than a stand alone house. It’s the same coverage and limits that a house would have so make sure you mention this to your realtor.
In some instances the buyer will ask for a specific company when they submit an offer to purchase your house. If the cost is the same or less it can easily be switched. If their warranty costs more you would have to agree to the increase.
The seller typically pays for the coverage on the day of closing. The title company holds out a portion of the proceeds and pays for coverage. If the title company doesn’t do this your real estate brokerage can. It’s all automatic so you don’t have do do anything except check that it’s the agreed upon price in your closing statement.
What if I Already Have a Home Warranty
Great news, if you currently have a home warranty on your house it is usually transferable to the buyer. The difference would have to be paid to make it a 12 month contract which will be handled at closing.
Some companies would prefer that a new contract be started for the buyer and purchased. You would receive a refund for the remaining time on your contract. Discuss this with the warranty company customer support and let your agent know.
Of course the best part of having your own home warranty is if any mechanical, electrical or plumbing repairs are needed after the home inspection your covered.
There are seller coverage plans that you can purchase while your house is on the market to be sold like the ERA Home Protection Plan. It is backed by American Home Shield and costs $75. You can only buy this plan in conjunction with a buyers plan. It will have the same deductible as the buyers plan.
General Important Information
Home warranty companies make it clear in their contract that they will not cover and repair pre-existing problems. These problems may be discovered during the home inspection the buyer orders and pays for. Unless you have a current home warranty they will not repair the item.
Warranties may not cover unusual wear and tear, plastic shelves and trays, improper installation or maintenance, code violations, items typically covered by home insurance, commercial-grade appliances or items still covered under the manufacturer’s warranty.
There are several reviews on warranty companies, here’s a link to reviewhomewarranties.com that has great information on cost, plans, whats covered and links to more information.
Remember the offer of the home warranty is another tool to hopefully sell your house quicker than your competition. You can get as involved in the process as you want. Most sellers just let their agent handle it, after all that’s what they get paid for!