Home Warranty Basics For Buyers & Sellers


What Is A Home Warranty

Being educated on the real estate process is important.  Home Warranty Companies have been around since the 1970’s.  They provide repair and replacement services for a home you are purchasing, or even your existing home.  If you are one who does not like expensive surprises, a Home Warranty may be a great option for you.

A Home Warranty is not to be confused with Homeowner’s Insurance, which covers your home’s structure and contents (depending on your policy) in case of theft, fire, storm, and other covered acts of nature.  There is also Flood Insurance that may be required, and is separate from both the Homeowner’s Insurance, and the Home Warranty.

A Home Warranty in comparison to Insurance, can cover repairs and replacements on covered items (based on the Home Warranty Policy) due to normal wear and tear, not acts of nature

Benefits To Buyer And Seller

Warranty Colorful

When purchasing a home, a buyer does not want to encounter any unexpected expenses when something breaks soon after moving in.  Imagine, you move into your dream home and awaken to a broken heating or air conditioning unit.  A Home Warranty can cover many of those main appliances, and lessen the worry of the new homeowner.

Several Types Of Coverage

A Buyer Conversion Warranty is purchased by the Seller, and transferred to the Buyer on the day of the closing. These can help motivate a Buyer to purchase one home over another.  A Buyer may also purchase what is referred to as A Buyer Direct Home Warranty.  Buyers, or the Buyer’s Real Estate Agent can purchase this at the closing, and it too becomes effective on that day. It may also be purchased up to 90 days after the closing depending on the Home Warranty Company’s guidelines.  Most Home Warranty’s are effective for one year, and are renewable.

Real Estate Agent’s are taught about Home Warranty’s in their Pre-Licensing and continuing education requirements, to stay knowledgeable about the Home Warranty process. The Team at Elevate Realty in Texas uses the Home Warranty quite often as incentives to their Buyer’s and Seller’s.  Real Estate Agent’s are well versed on the different Home Warranty products available.

The Seller Home Warranty  covers the property during the listing.  The seller benefits from the coverage of items that may require costly repairs during the listing period.  Since this type of Warranty is in effect for the Seller, after the Buyer Inspections, many of the items found deficient could be covered for a mere service call fee. This plan can be transferred to the Buyer at the closing also.

Cost Of A Home Warranty

The cost of a Home Warranty varies according to your location, your property and the level of coverage you choose. Basic coverage starts at about $350 and can cost up to $600, give or take,  for more comprehensive plans.  Whether you choose to cover appliances or major systems (like your HVAC system) or both, will determine the cost of your plan.  You can add extras if needed, such as a swimming pool, and/or additional appliances.  There are Service Fee’s that are not included in your annual premium depending on the company, and the type of coverage that you choose. These fees typically range from an average of $60 to $100 per service call.

Covered Items

An important consideration when choosing a Home Warranty is what is covered, and what is not. Be aware that all plans do not cover all appliances and systems. For example, your heating system could be covered, but not your air conditioning unit. Find the plan that best fits your needs.

Denied Claims

A Home Warranty may not pay repair costs for all covered appliances and systems. There are circumstances under which the Home Warranty company can deny a claim.  Improper installation or maintenance, unusual wear and tear, and code violations are examples of what may not be covered.

How To Call For A Service Provider

You must call your Home Warranty company when you need service.  If you call a service technician on your own, they may not be a provider for that specific Home Warranty company and the work would not be covered.


Get The Best Customer Service

As with any business, check the Home Warranty company’s reputation.  Look for complaints filed against that company for unpaid claims, and check with the Better Business Bureau.  Always go with a reputable Home Warranty company, and be clear on their coverage guidelines.

Top Three Home Warranty Companies for 2017

According to Consumer Affairs 2017 Report on the 20 top Home Warranty Companies, American Home Shield is topping the list at Number 1. Choice Home Warranty and First American Home Warranty come in at second and third.  You can find a complete list of the top 20 Home Warranty Companies on the Consumer Affairs website.