Real Estate Home Warranties Explained

You can think of a home warranty as an insurance policy for the mechanical systems in your house like HVAC, plumbing, electrical, appliances, etc. Not to be confused with homeowner’s insurance which covers your home against perils like fire, wind, falling trees, water etc.  

A home warranty lasts for 1 year with the option to renew. Most have a deductible for each system which usually runs from $50.00 to $100.00. It’s for EACH system so if you have a plumbing problem and electrical problem at the same time you’ll pay a deductible for each.  There are usually several levels of coverage offered from just the main home systems with the basic coverage, to the top level handling coverage right down to door bells and garage door openers. There are add-ons too for pools, wells, septic. Coverage can be had for single family homes, condos, multifamily and mobile homes.  

We tend to think of warranties only on the ‘buy’ side but home sellers can benefit too. Many people are not aware that as a seller you can activate a warranty on your home while you have it listed! This can be a nice incentive for your buyer. Then transfer coverage to the buyer at closing. The best part is you are covered during the listing period and it may even help you with inspection issues.  

Over the years as a Realtor in the Dayton Ohio area I’ve seen home warranties save a lot of trouble. They are particularly important with aging higher cost systems like, furnace, A/C, water heater, plumbing. Most warranties run between $500 and $850 per year.  A basic water heater replacement can easily run $1500 these days.