Who Pays for a Home Warranty?
Any new homeowner’s worst nightmare is for a major system or appliance in their new home to break down or malfunction after closing. Because of the unpredictable nature of homes, an expensive repair or replacement is expected during the first year of owning a new house. That’s why getting a home protection plan or warranty is wise. Home warranties reduce worry and stress in the first few months of living in your new home and long term. A home warranty covers the associated repair costs if something goes wrong, but who pays for a home warranty?
Who pays for a home warranty: Buyer or seller dilemma
A common question, especially for first-time homebuyers, is whether the buyer or seller pays for a home warranty. In short, it depends. Whether the seller or buyer pays for a home warranty protection plan varies based on your local real estate practices and personal preferences. In many areas throughout the U.S., it’s normal for a seller to pay for warranty coverage because it’s a seller benefit in the purchase contract. In other areas, home buyers are encouraged to purchase a home warranty after closing to help their first year in their new home go as smoothly as possible.
Home warranty for buyers
In real estate transactions, the buyer can request a home warranty as part of the purchase agreement. In that case, the buyer is typically responsible for paying for the home warranty.
Some key benefits of having a home warranty for buyers include:
Peace of mind: A home warranty provides added peace of mind, knowing that major systems and appliances in the home are covered.
Financial protection: With a home warranty, buyers don't have to worry about expensive repairs or replacements for covered items.
Convenience: Instead of searching for reliable service providers when a repair is needed, buyers can simply contact the home warranty company and have the issue taken care of.
Home warranty for sellers
While buyers may request a home warranty, sellers also have the option to provide a home warranty as an incentive to potential buyers. In these cases, the seller is responsible for paying for the home warranty. This added value can potentially increase the chances of a successful sale.
How much does a home warranty plan cost the seller or buyer?
A wide variety of coverage options are available based on the age, size, and location of your home. A higher deductible reduces your premium on the annual home warranty price. Regardless of who pays for the home warranty coverage, most providers offer the option to pay your yearly premium upfront or in monthly installments.
How do home warranties work?
Each plan is slightly different based on what the agency offers, but most operate similarly:
The homeowner calls the warranty company when a home system or appliance breaks or stops working.
The warranty company calls a provider to inform them of the problem and that they are covering it.
The provider calls the homeowner to schedule an assessment or repair appointment based on the specific issue.
The provider fixes the problem. If included in the policy, the warranty company will pay to replace and install a new appliance when a repair isn’t an option.
The homeowner pays the provider a service fee for their visit. This service typically ranges from $50 to $100 and is verified in your warranty plan.
What does Porch home warranty cover?
Each plan is unique and may cover different systems and appliances. Porch whole home warranty specifically covers:
Handyman Service
Electrical System
Central Heating
Central Air Conditioning/Cooling System
Water Heater
Clothes Washer
Clothes Dryer
Ceiling Fan
Built-in Dishwasher
Primary Kitchen Refrigerator
Built-in Microwave
Cooking Range/Oven/Cooktop
Garbage Disposal
Garage Door Opener
Plumbing System
Drain Line Stoppage
Porch’s policy also had optional coverage for:
Roof Leak Repair
Exterior Sewer Line
Exterior Water Line
The responsibility for paying for a home warranty in a real estate transaction can vary depending on negotiations between the buyer and the seller. When buyers request a home warranty as part of the purchase agreement, they are typically responsible for paying for it. On the other hand, sellers can provide a home warranty as an incentive to potential buyers, in which case they would be responsible for the cost.
