Home Warranties: What to look for and how to advise your clients

In our competitive and busy market, many buyers are no longer asking for home warranties as part of the purchase contract, and homeowners certainly don’t feel the need to offer them. So why, as an agent, should you worry about home warranties? Because your clients will want to know if they should buy one and they’ll turn to you for advice. Be prepared to offer an expert opinion with our tips.


Have the client look at the seller’s disclosure, the inspection report, and think about their personal observations. Home warranties repair or replace things that break down from normal wear and tear. Have your clients make a list of things in the home that are well-maintained but nearing the end of their expected lifespan, are expensive to repair or are necessary for quality of life. These are things like hot water heaters, HVAC units, and appliances. These are the things that your client will want to ensure are covered. Have them keep those things in mind when they are reviewing their coverage options. Remember that major structural items, like the roof and foundation are generally covered by home owner’s insurance and not home warranties. Also, if the home is new or has new systems, the manufacturer warranty may offer some initial coverage, initially reducing the need for a really substantial warranty policy

Pricing versus Coverage Limits

Your client will want to consider the cost of the premium of the plan, as well as service call fees. And they will also want to consider the limits of the policy. If they are really concerned about the HVAC unit breaking down in the middle of a heat wave, then they will want to ensure that the policy they choose will cover the cost of a new system if needed. Some policies will limit the amount of coverage available on certain items. They need to consider the value having a policy given the amount required to repair an item unexpectedly versus the cost of the policy, service fees, and whether the limits will cover the replacement costs.

Keep in mind that home warranties won’t cover problems arising from a lack of maintenance or known conditions. For instance, you can’t buy a home warranty policy if your air conditioning is already broken and then expect the warranty to cover that system.

Who is doing the work?

If your clients have preferred contractors, have them ask whether they are contracted with a home warranty company and which ones. When they are reviewing policies, they should ensure that the warranty company only works with contractors who are licensed and bonded in Texas. Your clients should ask about their vetting process and how they handle work that doesn’t meet correct standards.

Why should your clients consider a home warranty?

The average annual cost of a home warranty is several hundred dollars. That can mean conservable savings if something expensive break down. A $400 warranty is well worth the money if you are replacing an $8000 air conditioner. Cost savings aside, a home warranty can offer some peace of mind if your client is doesn’t have cash on hand to handle an expensive repair.

Make sure your clients read online reviews of different warranty companies before they make their final decision. Not all warranty companies are the same.

Home warranties can be a great option for your clients, and you should make sure they understand what is – and isn’t – covered before they buy their policy. If they do opt to buy a policy ask them to tell you what company and policy they chose. You might even ask if you can write their policy number in their file. Because your clients will call to ask you for recommendations for contractors when the oven breaks, or the garage door won’t open. If they’ve bought a warranty, you could save them a lot of money and heartache when you remind them to call their warranty company. Having that policy information on hand will be a great benefit to your clients.

And THAT’S how you become their trusted real estate advisor for life.