Understanding Home Warranty Purchased by Seller: A Complete Beginner’s Guide

When buying a home, many first-time buyers encounter the term 'home warranty purchased by seller.' This can be a great advantage, offering peace of mind and financial protection. But what exactly does it entail? In this guide, we'll explore the ins and outs of seller-purchased home warranties, helping you make informed decisions.

What is a Home Warranty?

A home warranty is a service contract that covers the repair or replacement of key home systems and appliances. It differs from homeowner's insurance by covering items that break down due to normal wear and tear.

Why Do Sellers Offer a Home Warranty?

Offering a home warranty can make a property more appealing to potential buyers. Here's why sellers might include one:

Increases Buyer Confidence: Buyers feel more secure knowing that unexpected repairs are covered.
Competitive Edge: In a competitive market, a home warranty can differentiate a listing.
Reduces Post-Sale Issues: Sellers can avoid disputes about appliance conditions after the sale.

How It Works

When a seller purchases a home warranty, they typically pay for the first year of coverage, with the option for the buyer to renew the contract annually.

What Does a Home Warranty Cover?

The specifics of what a home warranty covers can vary, but generally include:

Major Appliances: Such as refrigerators, ovens, and dishwashers.
Home Systems: Including electrical, plumbing, and HVAC systems.

For more detailed information on available plans, you might want to explore where to buy extended warranty for appliances.

Benefits for Buyers

Buyers can benefit greatly from a seller-purchased home warranty:

Cost Savings: Reduces out-of-pocket expenses for repairs and replacements.
Convenience: One call to the warranty provider can initiate a repair service.
Peace of Mind: Provides assurance that unexpected repair costs are covered.

Limitations

While beneficial, home warranties do have limitations. They may not cover pre-existing conditions or issues that arise from improper maintenance.

Renewing a Home Warranty

After the initial year covered by the seller, buyers can choose to renew the warranty. This decision depends on the age of the home and personal preferences. For more comprehensive protection, consider a repair protection plan.

FAQs

What is the difference between a home warranty and homeowner's insurance?

Homeowner's insurance covers damages from events like fires or theft, while a home warranty covers the repair or replacement of home systems and appliances due to normal wear and tear.

Can a buyer negotiate a home warranty in the sale?

Yes, buyers can negotiate for the inclusion of a home warranty during the purchasing process. It can be part of the offer or negotiated during closing.

What happens if a repair is needed?

The homeowner contacts the warranty provider, who will then send a qualified technician to assess and fix the issue. The homeowner typically pays a service call fee.