How to Ask for and Negotiate a Home Warranty with Sellers

Imagine…the closing documents have all been signed and you’re moving into your new home. You’ve spent your first day unpacking boxes and putting things away, and now it’s time for a well-deserved hot bath. There’s just one problem: the hot water isn’t working. Just like that, your relaxing evening turns into a stressful ordeal.

However, if you had negotiated a home warranty into your home purchase, getting help for a broken water heater (or other covered problem) would be as easy as submitting a service request online or via a quick phone call. For example, with a home warranty from First American, you're protected when your home's covered appliances and systems break down unexpectedly.

Read on to discover the best ways to negotiate a home warranty with the seller and other helpful home-buying tips.

What Is a Home Warranty and Why Do I Need One?

For new homeowners, the money-saving potential that comes with home warranty benefits is significant. If you've just spent your hard-earned money buying and moving into a new home, you may not have much set aside for problems like a broken water heater. And if you're new to the area, you may not know who to call to get it fixed.

Luckily, a First American home warranty has you covered. When you file a claim with us, we'll connect you with a prescreened service provider in your area who can get your water heater or other covered appliance or system back up and running. The best part? Your home warranty coverage can be included in your purchase — courtesy of the seller.

Many new homeowners are unsure of the difference between a home warranty and homeowners insurance, so let's get into that now. Homeowners insurance is typically required by your mortgage lender with a home purchase, and it covers your home in case of natural disasters or unexpected damage. This usually includes severe weather, fire, theft, and similar situations. On the other hand, a home warranty covers many of your home's major systems and appliances when they inevitably break due to normal wear and tear. 

If you’ve depleted your financial reserves to purchase your new home, you may not have enough set aside for repairing or replacing your home's crucial appliances and systems when they break. That’s why one of the best home warranty benefits is that it offers a reliable repair/replacement solution that saves you money on out-of-pocket expenses. It benefits you by protecting your budget when covered systems and appliances break.

Learn More: What's the Difference Between Homeowners Insurance and a Home Warranty?

Getting Ready to Buy

Before you negotiate a home warranty with the seller, you'll need to prove you're an attractive buyer. Here are a few tips to follow at the beginning of the process:

Do Your Research

First things first, make sure you're ready to buy a home. Check your credit score, keep an eye on the housing market, and know how much you must set aside before starting the process. Nothing can shut down a sale faster than a buyer who isn't qualified or prepared to purchase. 

Prep Your Finances

You may need to start working on your credit score months, or even years, ahead of buying your home. Learn how to prepare your credit score for buying a home, and be sure to get approved before making an offer. Get pre-approved by your chosen lender to solidify your offer.

Negotiation Tips

Negotiating a home warranty into your purchase offers important benefits and advantages to both you and the seller. That’s why it’s always a smart move for you or your agent to request a home warranty during the transaction period (if the seller hasn’t already included one). Communicating the value that home warranty coverage offers is critical to your negotiating success. And the more knowledge you have, the better, so read on.

A Home Warranty Benefits Everyone

A home warranty can benefit both the seller and the buyer. In most areas of the country, basic coverage for sellers is included with buyers’ home warranty coverage.*

For sellers looking to confidently present their property for sale, a home warranty offers an easy, cost-effective way to have covered items fixed while their home is on the market. They don’t have to worry if appliances or systems break. If a dishwasher, for example, stops working, they can get it repaired or replaced with significant out-of-pocket savings.

This can typically help the sale move along faster — which is good for everyone — since both parties know that systems and appliances that break down during or after the sale can be fixed quickly and affordably. 

Negotiating a home warranty with sellers is a matter of convincing them to order coverage. During your negotiations, make sure they understand the key advantages home warranty coverage brings, and how it can benefit them financially, keep the sale on track, and save time if any issues arise during the listing period. They also don’t have to worry if a covered item breaks after the sale, as you’ll have a home warranty to take care of the issue.

Know the Market

If it’s a buyer’s market (lots of available inventory), you may not need to negotiate with the seller to include a real estate home warranty. But in a seller’s market (high demand with few available homes), it may be more difficult to convince the seller or their agent to provide extras like a home warranty.

In these cases, it pays to point out the advantages described above that coverage provides. Especially for older homes with well-used appliances and systems, home warranty coverage is crucial. And if money is tight, coverage can provide opportunities for significant out-of-pocket savings — for both sellers and buyers.

Learn more about how a home warranty benefits sellers and buyers.

Get Your Inspections

Inspections are one of the most crucial steps in purchasing a home. They can uncover issues you weren’t aware of and things the seller may need to fix before you complete your purchase. Learn more about what home inspections cover and why they are so important when buying a home.

Pro tip: Ask why the seller is moving. You may uncover an issue that led them to look for a new home.

Common Mistakes to Avoid

We hope you’re feeling confident after reading our home warranty negotiation tips. To help you   be as well-informed as possible during the process, make sure you avoid these common mistakes:

Mistake #1: Not Reading the Fine Print

Home warranties are a great asset when buying or selling a home. But as with any contract, reading the fine print is essential. Be sure to ask your real estate agent plenty of questions about the terms, conditions, and limitations of your home warranty contract so you know what’s covered and what’s not.

Read more about how home warranty claims work in our Guide to the Home Warranty Process

Mistake #2: Not Making the Most of Your Home Warranty

Be sure to register for your home warranty online account as soon as the sale closes, so you’ll be ready to submit claims online. You can also call in a service request, but with an online account, you can easily manage all aspects of your plan. With a First American home warranty, you’ll also get access to valuable member benefits including discounts on appliances, refrigerator filters, HVAC filters, home services, and more.

Mistake #3: Forgetting to Renew Coverage

Always remember to renew your home warranty annually to avoid a lapse in coverage — you never know when a covered household item will unexpectedly stop working properly. Make sure to read your contract and learn when your coverage expires so you can make any upgrades or changes to your plan and keep your coverage going. A home warranty is always a smart investment, whether you’ve owned your home for 1 day or 10,000 days — or more.

FAQs About Home Warranties for Real Estate Transactions

What is the best type of home warranty for homebuyers?

If you’re buying a home, we recommend looking into our home warranty plans for buyers and sellers. This coverage is tailored just for real estate transactions. Sellers get coverage during the listing period and buyers are covered as soon as the sale closes on your new house.;

How much should I expect to pay for a home warranty?

The home warranty cost depends on where you live, and which plan you choose. If you’re a homebuyer, you can get a quote today or talk to your real estate agent to find out how much your coverage will cost. 

What does a home warranty not cover?

A home warranty typically doesn’t cover items included in your homeowners insurance plan or cosmetic defects. Most home warranties won’t cover items that were broken before coverage starts. However, First American plans for home buyers will cover "unknown" pre-existing conditions. This means we will cover something that was broken before you bought the home, but that you didn’t know about and wasn’t revealed in the home inspection.

Be sure to read your contract thoroughly to understand what is and isn’t covered. To learn more, read our blog, What’s Not Covered by a Home Warranty. 

* If you are in Florida or California, sellers coverage costs extra.

The contents of this article are provided for general guidance only. First American Home Warranty does not assume any responsibility for losses or damages as a result of using this information.