Two Options for Getting a Home Warranty
There are two options for ordering and getting a home warranty: an agent-ordered home warranty and a self-purchased home warranty. If you are wondering if you should even get a home warranty please read HERE. The difference between buying your own home warranty and having your agent order one before closing on a home often comes down to timing, cost, and potential benefits. Here’s a breakdown:
1. Timing and Responsibility
Agent-Ordered Warranty: If we, as your real estate agents, order a home warranty before closing it's often as part of the closing deal. In this scenario, the warranty might be a part of the negotiation, and sometimes it's provided as a seller concession to make the property more attractive to buyers. Typically these warranties will cover the home for a year starting from the closing date. You will then have the option to renew regardless of how many claims you have made (unlike home owners insurance).
Self-Purchased Warranty: Buying your own home warranty means you can choose when and how to purchase it. This could be before or after closing. If you purchase it after closing, you’re responsible for the cost and for selecting the plan that suits your needs. Coverage also doesn’t typically start until after 30 days of paying for the plan.
2. Cost
Agent-Ordered Warranty: Sometimes, the cost of a warranty ordered by the agent is covered by the seller or negotiated into the purchase price during due diligence. We have found sellers to be willing to offer one at their cost if they have older HVAC systems or older appliances. If the seller is paying for it, I typically write that you, as the buyer, gets to choose the plan up to a certain dollar amount. If you want one that is more expensive, you have that option by just paying the difference yourself at closing. There are also plans with slightly lower service provider costs open to agents that aren’t options for home owners when purchased on their own. If the seller is not paying for the warranty, we can still order it for you and you can have the closing attorney pay at closing. You would bring the additional money for the warranty as part of your overall purchase price. Some warranties will let you call after closing and pay yourself. The biggest benefit is that coverage will start immediately.
Self-Purchased Warranty: If you buy the warranty yourself, you’ll be responsible for the full cost. Prices can vary based on coverage levels and the provider. When you purchase it yourself you often have the option to pay slightly more overall by paying monthly instead for a whole year in advance.
3. Coverage and Customization
Agent-Ordered Warranty: We are happy to look into the details and provide you with the fine print of any warranty we might order for you. We get no kickbacks and only want you to have a good experience with the warranty. Sometimes it can be hard to see all the fine print before ordering, but if ordered at least a few days prior to closing, you should get all the details to review before it is paid for. If you don’t like the details, you should have time to order another one. If you never pay for a warranty, it is not in affect which gives you this option.
Self-Purchased Warranty: When purchasing independently, you have more flexibility to compare different providers and plans, and you have more time to select coverage that best suits your needs. This might include add-ons or specific coverage for items like pools or well systems (although these are also offered on agent ordered plans). However, there is typically a 30 day waiting period before you can make any claims.
For Sellers Providing a Home Warranty for Buyers
Agent-Ordered Warranty: If the home you are selling has older systems that you are worried about, there are home warranties your agent can order for you that take affect immediately and will be transferred to your buyer at no additional cost. You wouldn’t pay for this warranty until closing. This can save some time during negotiations of repairs and potentially saves you money if any of the repairs the home inspection identifies is covered by your warranty.
Self-Purchased Warranty: You can buy your own warranty but it will be subject to the 30 day wait period. It should be transferable to your buyer but only for the amount of time left on the plan you paid for.
There are definitely advantages for both buyers and sellers to have their agent order the home warranty. We have had the best luck with First American and that is the plan I have personally. However, warranty companies change hands and policies change. If you have any questions please reach out, I am happy to help!