A home buyer, home seller, or real estate agent can pay for a home warranty. Each may pay for the warranty at closing or after closing, depending on who buys it.
Here are the details about who pays for a home warranty, who orders the home warranty in a real estate transaction, and important information that a real estate agent should provide to their clients about their home warranty coverage.
Let’s start with a few examples of who pays for a home warranty:
- A seller might purchase one prior to listing, then convert their Seller Coverage to Buyer Coverage as an incentive. Home warranties are the most-used incentive that sellers offer buyers at closing.
- A listing agent may provide Seller Coverage to a selling client during the listing. In most states, this coverage is complimentary ($60 in Florida).
- A buyer’s agent may purchase Buyer Coverage as a gift or recommend that the buyer purchase Buyer Coverage themselves as part of the transaction.
- A homeowner can also purchase a home warranty separate from a real estate transaction at any time during their homeownership. They could have owned the home for 20 years and still be able to purchase one.
Is the Cost Included in the Closing Fees?
Sometimes.
A home warranty may be rolled into closing costs if the buyer purchases it at closing. Buyers and sellers may negotiate payment with each other in these situations.
If it’s the real estate agent who pays for a home warranty in a real estate transaction, it’s unlikely that the cost of the home warranty will appear as a closing fee.
However, if the buyer purchases a home warranty themselves before closing, it may appear in closing costs.
What Questions About Home Warranties Should an Agent Be Sure to Answer for a Client?
It’s natural to have questions, and it’s important for an agent to be able to answer those questions. Here are a few you may want to ask, along with the facts you need to know to make an informed decision.
How much does a home warranty cost?
- Home warranty costs largely depend on location, the plan and whether you choose to enhance coverage with options.
- The most basic plans can range between $300 and $500 a year.
- Enhanced plans, including options, could cost $600 or more a year.
You can get a free quote from 2-10 Home Buyers Warranty (2-10) to help you determine how much your coverage will be.
What does a home warranty cover?
A typical home warranty could provide coverage against covered breakdowns to the following:
- Plumbing systems (water heaters pipe leaks)
- Electrical systems (wiring, switches)
- Refrigerators located in the kitchen
- Garbage disposals
Your coverage depends on the kind of Plan Agreement you purchase. Additionally, you can enhance your home warranty with optional coverage for things like roof leaks, hot tubs, and extra refrigerators.
What isn’t covered under a home warranty?
Here are a few of the things that home warranties don’t cover:
- Secondary problems from a broken appliance or system
- Modifications to accommodate replacements
- Items like sprinkler systems, walls, windows, and doors
What do I look for in a home warranty contract?
Always read your coverage documents when purchasing a Plan Agreement. Be sure to know what’s included and what’s excluded. Home warranties can be powerful, but they are not all-inclusive.
Example: You have a fridge in your kitchen and one in your basement. You have standard coverage. If your kitchen fridge suffered a covered breakdown, it’s covered. But if your basement fridge broke down from routine use, it’s not. If you’d purchased the additional refrigerator option, your home warranty would cover both.
Look also for any Plan Agreement dollar limits. 2-10 provides terms, exclusions, and dollar limits clearly, so you always know what’s covered.
Is a home warranty worth it when buying a home?
Yes. A home warranty can help protect a buyer's budget against covered breakdowns when they need it most. Between the costs of a down payment and higher mortgage rates, many buyers find themselves without a plan for expensive, covered breakdowns. A home warranty can provide those buyers with a plan to protect their budget,
A home warranty provides a single point of contact when a covered system or appliance breaks down. With a 2-10 home warranty, a solution for a covered system/appliance breakdown is just a call or click away.
Let’s recap
In this blog, we’ve covered who pays for a home warranty and who orders the home warranty in a real estate transaction. We’ve also gone over a few of the facts you should be prepared to provide your clients to make sure they’re able to make an informed decision about their covering their home’s systems and appliances with a home warranty.
- A seller, listing agent, or buying agent may pay for a home warranty.
- You should be prepared with facts about things like how much a home warranty costs, what it does and doesn't cover, what to look for, and whether a home warranty is worth it.
- A home warranty from 2-10 offers clients coverage, value, and peace of mind.
No matter who pays for it or when it’s added to the transaction, a home warranty can give buyers, sellers, and agents crucial peace of mind. If you want dependable protection for covered breakdowns, explore a 2-10 Home Buyers Warranty plan and see how easy it is to safeguard your budget.
