Who Pays for Home Warranty? Buyer vs. Seller

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Home Warranty by American Home Shield®

#1 Home Warranty Company with more than 2 Million Members

Home warranties are an asset when it comes to the purchase or sale of a home. In most states, a home warranty isn’t a requirement when you buy or sell a house, but it can go a long way in settling issues before they start. But who pays for a home warranty, and is a home warranty required at closing? Home warranties are typically purchased by either the seller or the buyer through their real estate agents. A home warranty is not required at closing, but there are a few reasons why having one may benefit all parties involved. 

Does the seller have to pay for the home warranty?  

It’s not a requirement, but if you’re the seller, buying a home warranty for the buyer may be beneficial in several ways.  

  1. It will make your house more attractive for a buyer. For people looking to purchase a home, one of the big worries is whether or not they’ll accidently buy a money pit. If you offer a home warranty as part of the sale, a potential buyer can feel confident in the fact their investment and budget are protected from potential breakdowns of appliances or home systems. That means your house may sell more quickly and maybe for a higher price.  
  2. It could save you money if something breaks down while your house is on the market. You know what doesn’t impress a buyer when taking a tour of a home? Broken stuff. It may be hard to imagine during a hot seller’s market, but sometimes your house might take a while to sell. While you’re waiting for someone to make an offer, appliances can start to act up. If the home warranty is purchased by the seller, the warranty will cover the home while it’s on the market and then transfers to the buyer upon closing. 
  3. It may allow you to sell your home more easily without an inspection. Inspections are important for buyers, but you may want to try to sell your home without one as a seller. With a home warranty included in the sale, buyers may be more inclined and feel more confident to buy your house without an inspection.   

Are there advantages of purchasing a home warranty if you’re the buyer? 

If you're the buyer, you may think asking the seller for a home warranty is the way to go. Throwing the home warranty cost to the seller means more money saved, right? This may be the optimal choice, but remember that whoever buys the warranty is in charge of the level of protection.   

Unless the seller has a heart of gold, they may be more likely to purchase whichever home warranty plan is cheaper, which may leave gaps in your coverage. If you opt to buy the home warranty through your real estate agent, you may be able to negotiate the seller down a little in price and get your preferred home warranty included in closing costs.   

Luckily, American Home Shield has competitive pricing and plans with both sellers and buyers in mind. Our plans offer comprehensive coverage for up to 23 essential appliances and home systems. We’re here to make sure your household runs properly, and your budget stays on track. 

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New Jersey Residents: The product being offered is a service contract and is separate and distinct from any product or service warranty which may be provided by the home builder or manufacturer.