Should you purchase a home warranty?

In today’s competitive real estate market, sellers are looking for an edge that sets them apart from the rest. Can offering a home warranty to potential buyers be the thing that seals the deal on your sale?

What exactly is a home warranty? Contrary to popular belief, a home warranty is not an insurance policy. It is separate contract covering repairs and replacements on your home’s appliances or mechanical systems, usually for a period of one year.

According to research from Angie’s List, a basic home warranty across the country costs between $350 to $500 a year, and it typically covers kitchen appliances, plumbing, water heaters, furnaces, sump pumps and whirlpool tubs, as well as ceiling and exhaust fans. Home owners can call a service number for a timely repair and pay a small deductible, with the bulk of the work covered under the warranty.

Is a home warranty necessary? While a home warranty isn’t as crucial as insurance, it can come in handy, particularly if you’re selling a home with older appliances or systems. A one-year warranty will protect you while your place is on the market, and you’ll avoid breaking the bank to make repairs that could impact the sale.

The best part of a home warranty is that it can be transferred from the seller to the buyer once the property is sold. If buyers are concerned about potential costly repairs — particularly if they’re spending their life savings on an older home —a home warranty will ease their minds. In fact, it may be the parachute they need to take the plunge.