Who Buys the Home Warranty?

Who Buys the Home Warranty?

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When a home is a part of a real estate transaction, there are many opportunities to protect it with a home warranty plan. Who purchases the home warranty and when, though, depend on a number of difference circumstances. Let’s take a look at who buys the warranty and when with this article!

When The Seller Buys the Home Warranty

Sometimes the seller will decide to advertise that the home comes with a home warranty. When this happens, the seller has often already purchased a home warranty for the buyer and it is included in the sale price of the home.

Who Buys the Home Warranty?


This not only provides the buyer peace of mind but it can also increase the sale speed and price point of the home. A study done by the Service Contract Industry Council shows that, on average, a home with a home warranty sells for $2,300 more and 11 days faster than a home without a home warranty. Most home warranties cost between $400-$600 a year, which makes purchasing one for a buyer provide a huge return on your investment.

As an added bonus, when a seller offers a home warranty with the sale of a home, most of the time the home warranty company will provide free listing coverage. For example, Landmark Home Warranty offers free listing coverage for sellers who are purchasing a home warranty for their buyer. The listing coverage has a flat rate limit of $1,500 until closing when the full plan goes into effect for the buyer. Not only does the seller provide peace of mind for the buyer, they’re protected if anything fails while the home is on the market. It’s a win-win.

When the Title Company Buys the Home Warranty

If the seller doesn’t offer a home warranty with the sale of the home up front but it has been determined that a home warranty will be included with the sale of a home, it’s often the title company that purchases the home warranty. Sometimes, the buyer’s agent and buyer will look through different home warranty companies in order to determine which one provides the best coverage for the home. If you’re interested in doing this, you can find a great guide to the five questions you should ask before buying a home warranty here. If the buyer or buyer’s agent has no preference on which home warranty company provides coverage on the home, they will let the title company decide.

Using the money from the real estate transaction, the title company will “buy” the home warranty. Obviously, the title company is not paying for the warranty out of their pocket, but they are the ones who choose the coverage the buyer will receive based on how much money is set aside for a home warranty in the contract of sale. Using that price point, the title company will purchase a home warranty for the buyer. This home warranty will begin on the day of closing. Most home warranties will not pay for the problems found in the home inspection, so the new homeowners should make sure to repair or replace any of the outstanding issues in the home before relying on the home warranty to repair or replace systems or appliances in the home.

When the Real Estate Agent Buy the Home Warranty

If a home warranty is not included with the sale of the home, either from the seller or included in the contract of sale, the buyer’s agent may purchase a home warranty to protect their buyer. Many real estate agents provide closing gifts for their buyers, as a way to say thank you for their business and congratulate them on their new home. For a home that has older systems and appliances that may fail, the real estate agent may purchase a home warranty for their buyer as a closing gift. If this happens, the seller does not choose the home warranty. The buyer’s agent may ask the buyer if they have a preference on which home warranty company they use, but usually the real estate agent will pick a home warranty who has great customer service and an excellent reputation for coverage. After all, a real estate agent wants to give the buyer a gift that leaves a great impression!

When the Home Buyer Buys the Home Warranty

When a buyer wants a home warranty when they purchase their home, but they don’t get one during the sale of a home, they can purchase a home warranty for themselves. Some home warranties even let buyers purchase the warranty at discounted rates if it is within a certain period after purchasing the home. (Landmark, for example, lets buyers purchase real estate plans within 30 days of closing.) The buyer can select their own home warranty company and must provide proof of repair for the problems mentioned in the home inspection. They will then be protected from wear and tear on their systems and appliances.

If you are interested in purchasing a home warranty for yourself or for your client, please compare home warranty plans and pricing here.

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