Is a Home Warranty Required at Closing? What Buyers Should Know

When you’re buying a home, you’re faced with dozens of costs, fees, and decisions, so it’s natural to wonder, “Is a home warranty required at closing?” While it’s not required, many buyers, sellers, and real estate agents choose to include a home warranty at closing because it can help protect a homeowner’s budget from expensive repairs and replacements when covered household items break.

Keep in mind that a home warranty is different from homeowners insurance. Homeowners insurance covers major, often unexpected events that could happen, like fire or storm damage. However, a home warranty covers breakdowns to major home appliances and systems that inevitably will happen through normal wear and tear. Adding a home warranty as part of the home closing process is often the easiest way to secure immediate protection for essential household items that homeowners use every day.

Who Pays for a Home Warranty at Closing?

If a home warranty isn’t required, who covers the cost when it’s included at closing? The answer depends on your particular transaction and where you are in the home closing process.

• Buyer-paid coverage: Buyers can choose to add the cost of a home warranty to their own closing expenses, either by paying for it up front or by rolling it into their closing costs.
• Seller-paid coverage: Sometimes sellers offer home warranties as perks to attract buyers, especially in competitive markets. Home warranty coverage helps reassure buyers that if covered appliances and systems break during the home closing process or after moving in, their budgets can be protected.
• Agent-provided coverage: In some cases, real estate agents will gift home warranties to clients as a housewarming gesture.

Benefits of Buying a Home Warranty at Closing

While not required, there are good reasons why many buyers choose to include a home warranty during the home closing process:

• Instant security: When purchased through a real estate transaction, a home buyers warranty usually starts on closing day — and some warranty companies, like First American, have no waiting period for submitting claims.
• Protection from costly repairs: Furnaces, plumbing systems, and appliances like dishwashers and ovens can suffer sudden breakdowns at any time. A home warranty helps cover the cost of repairs and replacements, reducing unexpected expenses.
• Budget stability in the first year: Closing costs, moving expenses, and furnishing a new residence can drain household finances. A home warranty plan helps protect budgets from additional stress — and plans can be renewed annually for added peace of mind.
• Convenience: Many home warranty companies have vast networks of prescreened technicians on hand, so homeowners don’t have to search for help on their own.

These benefits can be especially valuable for first-time homeowners who may not have experience handling repairs or finding contractors.

Read more: Can you buy a home warranty after closing? Learn how to buy a home warranty if it’s been less than 60 days since you closed on a property.

The Real Value of a Home Warranty

The value of a home warranty is in the budget protection, convenience, and peace of mind it provides. A home warranty offers you a simple repair/replacement solution when covered items break, helping you keep your household running smoothly. System and appliance breakdowns can happen at the worst possible times, making home warranty coverage a reliable safety net.

For buyers, sellers, and even agents, the reassurance of knowing that breakdowns are covered can make the home closing process easier, and the transition into homeownership smoother and more affordable.

First American Home Warranty Can Help

So, is a home warranty required at closing? While it’s not required, many new homeowners find that it’s one of the smartest protections they can choose. Adding coverage at closing makes it easier for buyers to ease into the responsibilities that come with homeownership.

With a First American home warranty, you get reliable coverage that starts on closing day, a trusted network of service providers, and protection for the home appliances and systems you rely on every day.

Ready to protect your home? Visit First American today to get a free quote and find the home warranty plan that’s right for you.