A home warranty can be a useful tool if you want to sweeten a deal for a potential buyer. These warranties provide a service contract on major systems in a home. This can be reassuring for buyers, since no one wants a major furnace repair in the first year they buy a home.
Typically, a home warranty will cover major systems like heating, electrical, plumbing, water heater, ductwork and even appliances like a range, dishwasher or refrigerator. You should read the warranty carefully to know what is covered.
Home warranties do not cover your possessions, windows, fireplaces, solar panels, or the roof, but for a home seller, the cost of a home warranty ($350 to $750 per year) can be a relatively inexpensive way to give a buyer confidence. But if there is a lot of competition in your area and few homes on the market, offering a home warranty is usually unnecessary.
If you have recently purchased a home or refinanced, you may also be contacted by home warranty companies. Homebuyers might be interested in one if they have depleted their savings buying their home and they want to avoid expensive repairs right out of the gate.
Keep in mind that these warranties do have costs associated with them. There is generally a service call charge and you won’t be able to choose your own contractor. The warranty also will not cover items that have been improperly maintained, so if the previous owner didn’t maintain the furnace then the new owner may still be stuck with repair costs.