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What does it mean when a buyer asks for a home warranty?

When you're looking to sell your home, you might come across various terms and requests from buyers — but what exactly does it mean when a buyer asks for a home warranty? Well, a home warranty is fairly significant in the real estate transaction process: Let’s find out why.

A mixed race family and their home take shelter under a home warranty

What is a home warranty, and why do buyers want one?

A home warranty is a service contract that provides coverage for the repair or replacement of major home systems and appliances, and is typically offered by a third-party company, separate from the homeowners insurance policy. Home warranties go into effect after the purchase of a home, and they usually last for a specified period, often one year, with the option to renew.

Why do buyers ask for a home warranty?

  • Budget Protection: Buyers ask for a home warranty to protect themselves against unexpected repair or replacement costs. Purchasing a home is a significant financial investment, and unexpected repairs can strain a homeowner's budget. A home warranty offers peace of mind knowing that if a covered system or appliance breaks down, the buyer won't have to carry the full financial hit of repairs.
  • Convenience: Home warranties simplify the process of getting repairs done. Some home warranty providers can arrange for a qualified service technician to assess and fix the issue, while other providers give homeowners the freedom to choose their own licensed contractor, allowing them to find someone local that they know and trust, and schedule visits when it suits them.
  • Attraction to First-Time Buyers: Home warranties can be particularly appealing to first-time homebuyers who may not have experience dealing with home maintenance issues. It provides a safety net during the initial adjustment period of homeownership.

Hands hold a home and family, all covered by an umbrella

What does a home warranty cover?

The specific coverage of a home warranty can vary depending on the provider and the plan selected. However, most standard home warranty plans typically cover the following:

  1. HVAC (Heating, Ventilation, and Air Conditioning) systems
  2. Plumbing system
  3. Electrical system
  4. Kitchen appliances (e.g., refrigerator, oven, dishwasher)
  5. Washer and dryer
  6. Water heater

Pro Tip: While home warranties cover these items, they do not cover everything, and they may not cover pre-existing conditions, cosmetic issues, or items that have failed due to neglect or misuse.

A woman checks off a list of protected items in her home

What does it mean? Protection

When a buyer asks for a home warranty, they are seeking financial protection and peace of mind against surprise repair or replacement costs for major home systems and appliances. This makes a home warranty a valuable addition to real estate transactions, especially for first-time homebuyers or those looking to safeguard their budget. Ultimately, a well-chosen home warranty can help buyers transition into homeownership with confidence and financial security.

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