What Is a Home Warranty for Buyers?

Buying a home is one of the most significant investments you'll make — and one of the most exciting. But after you close on a new home, unexpected repairs can quickly turn excitement into stress. And if you need to replace an expensive home appliance or system, like your heating or air conditioning system, the financial burden can be draining. That’s where a home warranty for buyers comes in. It can help safeguard your budget from unexpected repair and replacement costs when covered household items break due to normal wear and tear.

Do you need a home warranty when buying a house? Although it’s not required, many homeowners, especially first-time home buyers whose budgets are already strained, purchase home warranties for financial peace of mind. Read on to learn what a home warranty is, how it works, and what to look for in a home warranty plan so you get the right coverage for your needs.  

What Is a Home Warranty?

A home warranty for buyers (also called a real estate home warranty plan) is a service contract that can cover many essential appliances and systems you use every day to keep your home running smoothly. It can help reduce the financial expense of costly repairs and replacements when covered items stop working, offering a convenient way to avoid unexpected bills and get your covered items fixed.

First American home warranties can include coverage for:

• Appliances such as dishwashers, refrigerators, washers, dryers, ovens/ranges/cooktops, and more
• Home systems, including plumbing, electrical, and HVAC

For extra layers of protection, some home warranty companies, like First American Home Warranty, also offer coverage options and upgrades such as coverage for pools/spas, luxury appliances, and more.

Home Warranty vs. Homeowners Insurance

Many homeowners believe that home warranties and homeowners insurance cover the same things. A home warranty covers different items than homeowners insurance, however, and works in a different way.

While homeowners insurance covers catastrophic damage and loss resulting from natural disasters (such as fires, storms, and floods), vandalism, theft, and other major events, your home warranty covers everyday household items when they break — like when your dishwasher doesn’t drain properly, or your oven suddenly stops heating up.

For many first-time home buyers, a home warranty acts as a financial safety net, since finances are often stretched thin after closing on a new home. Good home warranty coverage can provide valuable peace of mind and help protect household budgets from costly repairs and replacements for covered home systems and appliances.

What to Look for in a Home Warranty for Buyers

A home buyer's warranty can cover major systems like plumbing, electrical, and HVAC systems, plus major appliances like refrigerators, ovens, dishwashers, washers, dryers, and more. It’s important to do your research to make sure you get the right home warranty plan for your budget and home, including any add-on coverage options and upgrades you might like.

When comparing home warranty plans, here are a few things to consider:

Coverage offered: Home warranty plans offer different levels of coverage at various price points. When choosing your home warranty plan, pay close attention to:

• The specific home systems and appliances covered by each plan you’re considering
• Available coverage options and upgrades
• Pricing for each plan
• Contract terms and conditions

Coverage limits: Coverage caps, or limits, are the total dollar amount a home warranty plan will pay for covered repairs and replacements. Coverage limits vary depending on the home warranty company and the plan itself. Reviewing and understanding how coverage limits work can help you avoid unexpected expenses when you need to submit claims.

Company legacy: Look for companies with strong reputations, positive customer reviews, and a history of reliable service. Pay attention to how long they've been in business, how their claims process works, and their available coverage in the region you live in.

How Does a Home Warranty for Buyers Work?

When you purchase a house and include a First American home buyer’s warranty in your purchase, you can start using your coverage as soon as the sale closes.

Requesting service is simple:

1. When a covered item breaks, contact us 24/7 online or by phone to submit a claim.
2. We’ll assign a prescreened independent service provider to schedule a mutually convenient appointment.
3. The technician will diagnose the issue, confirm coverage, and repair the broken item. If it can’t be repaired, we’ll replace it.*

How to Get a Home Warranty When Buying a House

It’s best to purchase your home warranty when closing on your new home. That way, your coverage starts when the sale closes, and you’re protected from Day 1 of homeownership. You can also purchase a home warranty for buyers for up to 60 days after your closing date.

Once you've selected a plan, it’s easy to make your purchase:

• If you’re closing or have just closed on a home, your real estate agent can order a home warranty for buyers. The cost is typically included in your closing costs.
• If it’s been more than 60 days since you closed on the purchase of a home, you can buy a home warranty for homeowners directly from the home warranty company.

Note: If you haven’t yet closed on your home, you may be able to negotiate coverage with the sellers. A common question in this scenario is, “Who pays for the home warranty — buyer or seller?” Typically, the seller pays for the home warranty at closing.  

Owned your home for more than 60 days? You can purchase a home warranty for homeowners.

Can a Buyer Take Over a Home Warranty from a Seller?

Often, a seller will purchase what’s called “seller’s home warranty coverage” when listing their home on the market. Technically, seller’s coverage is a component of the prospective buyer’s home warranty, because while it helps protect sellers when covered appliances and systems break during the listing period, the buyer continues the home warranty coverage upon taking ownership of the home.

At First American Home Warranty, it works like this:

1. The seller’s real estate agent orders the seller’s home warranty coverage when the home goes on the market.
2. After an offer is accepted, the seller’s agent updates the home warranty contract with the buyer’s information and any desired coverage options and upgrades. The buyer can even select a different First American home warranty plan if desired.

The buyer’s home warranty coverage starts on closing day and remains active for 12 or 24 months, depending on the plan. Buyers typically can renew their coverage annually.

Why Get a Home Warranty When Buying a House?

Home warranties offer numerous benefits for home buyers, especially first-time buyers:

• Peace of mind: Ease your worry about unexpected repairs or replacements on covered items right after closing.
• Household efficiency: Home warranties can help keep your home running smoothly by covering the essential systems and appliances you use daily.  
• A network of pros: First American Home Warranty’s network of prescreened independent service providers is at the ready when you need service. You don’t have to spend time finding help on your own.
• Budget protection for older homes: If your new home has aging systems and appliances that may be close to failing, a home warranty can potentially save you hundreds to thousands of dollars in repair or replacement costs.
• Renewable coverage: First American home warranties are renewable annually, if eligible. Maintaining continuous coverage can be a helpful budget protection tool.
• Broad home protection: Home warranties complement homeowners insurance by helping to fill coverage gaps for home systems and appliances that break from normal wear and tear.

Start Homeownership With a Home Warranty

A home warranty is a smart way to protect your budget. And as a new home buyer, it also means you don’t have to worry about finding help on your own when something stops working. Instead, you can focus on enjoying your new home. What’s more, all First American home warranty plans come with exclusive member benefits you can start using on Day 1 of coverage, like discounts on brand-name appliances, air filters, and refrigerator water filters, savings on general handyman services, and more.

Learn more about our comprehensive home warranties for buyers, and get a free quote today.

FAQs About Home Warranties for Buyers

Is a home warranty worth it for first-time home buyers?

A home buyer’s warranty can provide financial protection and peace of mind when covered household appliances and systems unexpectedly break. Knowing you have a convenient, budget-friendly solution in place for repairing — and even replacing — these items is a smart way to start homeownership.

When should you get a home warranty when buying a house?

It’s a good idea to purchase a home warranty during the home-buying process, because you’re covered starting on Day 1 of homeownership. In addition to comprehensive coverage, a First American home warranty for buyers includes re-keying service and many additional member benefits, providing you with security, convenience, and cost savings as you settle into your new home.

How do I choose a home warranty when buying a house?

Home warranty companies vary in what appliances and systems they cover, their coverage limits, available upgrades and options, pricing, and other factors. With more than 40 years in the home warranty industry, First American Home Warranty offers comprehensive coverage for a range of budgets and home types. Its established reputation and extensive network of prescreened independent service providers make it a popular choice among homeowners nationwide.

Can a buyer take over a home warranty from the seller?

Yes. Seller’s home warranty coverage is actually a component of the prospective buyer’s home warranty plan, so the buyer continues the coverage after closing on the home.  At First American Home Warranty, the seller’s real estate agent simply updates the home warranty contract with the buyer’s contact information and any coverage upgrades or options the buyer wants. The buyer can even select a different First American home warranty plan if desired.

What is the difference between homeowners insurance and a home warranty?

Homeowners insurance and home warranties are two different types of protection. Homeowners insurance protects your home against damage and loss caused by natural disasters (fires, storms, floods), vandalism, theft, and other major events. Home warranties protect your budget from costly repairs and replacements when covered home appliances and systems inevitably break from normal wear and tear. Because they cover different things, homeowners often have both as part of their overall home protection plan.

*In some instances, Homeowner and First American may agree to payment of cash in lieu of repair or replacement. Payment will be made based on First American’s negotiated rates with its suppliers, which may be less than retail. Please review the sample contract for specific coverage, terms and limitations.