The housing market is always competitive. Whether you’re a buyer or a seller, you’re always in competition with someone else to stand out in a crowded market. And when you’re selling a home, you want every advantage possible to attract numerous buyers.
One of the easiest-to-add tools for enhancing your home’s appeal is a home warranty. Read on to learn exactly what a home warranty is and how it benefits both sides of the sale.
What is a home warranty?
A home warranty is a service contract that helps cover the cost of repairing or replacing major home systems and appliances when they break down due to normal wear and tear. Unlike homeowners insurance, which typically covers unexpected events like fires or theft, home warranties focus on everyday breakdowns in systems like HVAC, plumbing, and appliances.
With American Home Shield®, the Seller Coverage Option ensures that both sellers and buyers are protected during this critical transition.
This plan provides:
- Coverage During the Listing Period: Sellers can add the Seller Coverage Option to the plan they intend to provide to the buyer. This option covers the same items as the ShieldEssential℠ plan and lasts for up to six months while the home is on the market (renewable at American Home Shield’s discretion).*
- Cost Flexibility: Payment for the home warranty for sellers isn’t due until closing, easing upfront costs for the seller.
- Protection at Closing: Once the home is sold, the warranty seamlessly transfers to the buyer, becoming effective at closing.
*See the plan agreement for coverage details, including service fees, limitations and exclusions. Coverage limits and charges for non-covered items may apply.
That timing is important for two reasons:
If a covered item breaks down, American Home Shield will work with you to get it repaired or replaced.
If the home inspector finds an issue, having a home warranty may help cover or defray the costs of a covered repair or replacement, which can help keep sales one track.
5 reasons a home warranty benefits your sale
Here are some of the biggest reasons why a home warranty for sellers is so beneficial to both you and the buyer:
1. Buyers may ask for homes with warranties
Trends indicate that buyers actually prefer homes that come with a home warranty for sellers. Approximately 1.4 million out of the 5.64 million homes sold in 2020 had a home warranty coverage, and real estate professionals often feel that adding a warranty to the sale sweetens the deal for buyers.
Highlighting your home warranty offer in your listing ad is a surefire way to attract more interest and sell your home faster— and at a better price.
2. It’s a low price with a high ROI
A home warranty typically only costs a few hundred dollars over the course of a year.
That’s a small price for making your home sell faster and at a higher price.
While every sale is different, real estate professionals often recommend home warranties as a tool to help homes sell faster and with stronger offers. Buyers may feel more confident making competitive bids when they know they won’t be hit with surprise repair costs right after closing.
Note: If you choose, you can also roll the cost of the warranty into the sales price of the home, relieving an extra financial burden from your side of the transaction.
3. A home warranty transfers to the buyer
When you close on the sale, the warranty will transfer to buyer of the home giving them coverage for a full year from closing.
That speed of coverage after transferring the home warranty from seller to buyer means the new owner can feel confident with their new purchase before they even start moving in—and peace of mind knowing they have a plan for those covered repairs down the road.
