Is a Home Warranty Worth It? What Buyers and Sellers Should Know Before Closing

If you've bought or sold a home recently, you've probably heard someone mention a home warranty. Some buyers request one during negotiations, while some sellers offer one to help make their home more appealing. But are home warranties actually worth it?

The answer depends on the home, the age of its major systems, and your expectations as a homeowner. Understanding what a home warranty does and does not cover can help you make an informed decision before closing.

What Is a Home Warranty?

A home warranty is a service contract that helps cover the cost of repairing or replacing certain home systems and appliances if they fail because of normal wear and tear.

Unlike homeowners insurance, which protects against unexpected events like fire, storms, or theft, a home warranty is designed to help with mechanical breakdowns.

Coverage often includes items such as:

• Heating and cooling systems
• Electrical systems
• Plumbing systems
• Water heaters
• Kitchen appliances
• Washers and dryers
• Garbage disposals

Every warranty company offers different plans, so it's important to read the details before purchasing coverage.

When a Home Warranty Makes Sense

A home warranty can provide peace of mind in several situations.

First-Time Home Buyers

Buying your first home comes with plenty of unknowns. If your refrigerator stops working a month after moving in or the water heater fails during the winter, those unexpected expenses can be stressful.

While a home warranty is not a guarantee that every repair will be covered, it may help reduce some out-of-pocket costs during your first year of ownership.

Older Homes

Many homes throughout St. Louis, the Metro East, Jefferson City, Columbia, and Lake of the Ozarks have charm and character that buyers love. They may also have older HVAC systems, water heaters, or appliances.

Even if everything is functioning properly during the inspection, older systems naturally have a higher likelihood of needing repairs over time.

Sellers Looking to Stand Out

In a competitive market, offering a one-year home warranty can give buyers additional confidence.

It shows you're willing to provide an extra layer of protection after closing, and it may make your listing more attractive when buyers are comparing similar homes.

What a Home Warranty Does Not Cover

One of the biggest misconceptions is that a home warranty covers everything.

Most plans do not cover:

• Structural issues
• Roof leaks
• Windows
• Cosmetic damage
• Damage caused by neglect or improper maintenance
• Pre-existing conditions

Many warranties also have service fees each time you request a repair, and coverage limits vary by company.

Reading the contract carefully helps avoid surprises later.

Should You Ask for One During Negotiations?

In many real estate transactions, buyers ask sellers to pay for a one-year home warranty as part of the purchase agreement.

Whether this is a reasonable request depends on several factors, including:

• The age of the home
• The condition of major systems
• Current market conditions
• The overall terms of the contract

In a buyer's market, sellers may be more willing to include one. In a competitive seller's market, buyers may choose to purchase one themselves if it provides additional peace of mind.

Your real estate agent can help you determine whether requesting a warranty is appropriate during negotiations.

A Home Inspection Is Still Essential

A home warranty should never replace a professional home inspection.

An inspection helps identify potential issues before closing so buyers can make informed decisions or negotiate repairs. A warranty only becomes relevant after closing if a covered item fails due to normal wear and tear.

The two serve very different purposes and work best together.

The Bottom Line

A home warranty isn't the right choice for every buyer or seller, but it can provide additional confidence during one of life's biggest financial decisions.

Every transaction is unique. Factors such as the home's age, the condition of its systems, and the terms of your purchase agreement all play a role in determining whether a home warranty is a worthwhile investment.

If you're buying or selling a home in St. Louis, the Metro East in Illinois, Jefferson City, Columbia, Lake of the Ozarks, or anywhere throughout Central Missouri, having an experienced real estate professional on your side can help you evaluate every option, including whether a home warranty makes sense for your situation.

Making informed decisions today can help you avoid costly surprises tomorrow.