Home Warranties for Home Buyers

Buying a home usually drains savings. Between the down payment, closing costs, and moving, there is often little left over for a surprise repair. That is why home warranties come up so often during real estate deals. Here is how they work for buyers and how to decide whether one makes sense for you.

How a home warranty works

A home warranty is a service contract that helps pay for repairs or replacement of covered home systems and appliances when they break down from normal use. You pay for the plan, and when something covered fails, you request service and pay a set service fee per visit. The provider sends a technician or authorizes a repair.

Coverage usually lasts one year and can be renewed. Plans commonly cover systems like heating, cooling, plumbing, and electrical, along with appliances like refrigerators, ovens, dishwashers, and washers and dryers.

Who pays for it

In many home sales, a home warranty is part of the negotiation. There are a few common arrangements:

• The seller pays and offers the warranty as an incentive to buyers.
• The buyer asks for it as part of the offer or after the inspection.
• The buyer purchases it directly, either at closing or after moving in.

Your real estate agent can help you understand what is typical in your area. If the seller is providing a plan, ask for a copy of the contract so you know what is covered.

Why buyers often find it useful

A new home comes with a lot of unknowns. Even a good inspection cannot predict when a water heater or AC unit will fail. A home warranty may help with:

• Older systems and appliances that still work but are near the end of their lifespan
• Limited cash after closing
• Not yet having a list of trusted contractors in a new area
• Peace of mind during the first year in the home

How it fits with your home inspection

Your inspection and your home warranty serve different purposes.

The inspection identifies current problems and the general condition of the home. Use it to negotiate repairs or credits with the seller.

The home warranty covers future breakdowns from normal use. Most plans exclude pre-existing conditions, so a problem flagged in your inspection may not be covered later. Address known issues during the sale, not through the warranty.

Keep your inspection report. It documents the condition of systems at purchase, which can be useful if a claim is questioned.

What to check before you accept or buy a plan

1. What is covered. Make sure major systems like heating, cooling, plumbing, and electrical are included.
2. What is excluded. Read the exclusions and coverage caps.
3. Add-ons. Pools, well pumps, septic systems, and second refrigerators may require extra coverage.
4. Service fee. Know what you will pay per visit.
5. Start date. Confirm when coverage begins, especially if it is tied to closing.
6. Renewal terms. Find out how renewal and pricing work after the first year.
7. Claim process. Learn how to request service and how technicians are assigned.

Tips for the first year

Once you move in, a few habits help you get the most from your plan:

• Find model and serial numbers for major appliances and systems
• Change HVAC filters on schedule
• Flush the water heater according to the manufacturer's guidance
• Keep a folder of receipts and service records
• Request service promptly when something stops working

Is a home warranty right for every buyer?

Not always. If the home is new construction, the builder may provide warranty coverage for a period of time. If the home has brand-new systems and appliances still under manufacturer warranties, you may not need much more. If you have a healthy emergency fund and trusted contractors, you may prefer to pay for repairs directly.

You can review coverage options in our home warranty guide and check rules in your area on our states page.

How Warranty Wizards can help

We help home buyers compare plans from independent third-party providers and explain what each one covers before you commit. You can request a free quote at /get-a-quote/.