The Home Warranty

When a home is listed on the market the seller has the option to accept or decline a home warranty.

The warranty can cost anywhere from $275 to about $425. It's a one-time charge and is paid at closing. Therefore the homeowner can elect to have the insurance just to add a little "Umph" to the sale. The home warranty usually covers a 12 month period. Some will actually cover up to a year before it sells and a year after it sells.

Here's the good thing about a typical home warranty. It will cover a repair....ONLY. This means that if a pipe were to break in a wall then the warranty people would come in and tear into the wall and fix the broken pipe. Then they leave. They don't fix the damage to the wall that the broken pipe did.

I had a client who had a furnace fail on them. They called the warranty people, paid the $50 service fee (there's usually a $50 fee per house call, per incident). The warranty people installed a new $2,000 furnace and it only cost the new home owner $50.

The cost of the home warranty can be paid for by either the buyer or seller at closing. It really depends on how the contract is written up.

The Realtor does NOT make a dime off the warranty. There are NO incentives to the Realtor in any form if a client accepts a warranty. The warranty company is completely separate from the real estate Broker and the Realtor. The Realtor doesn't care if you take the warranty or not. It really is up to the client.

If a seller accepts the home warranty as part of the strategy to sell the home, this does not mean that the new buyer has to accept the warranty. They can always decline it.

If a seller does NOT offer the warranty as part of the sale of the home then the buyer can accept it if they would like it.