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When It Makes Sense To Pay The Home Warranty For The Seller

Home Warranties tend to be very important for prospective homebuyers and so agents usually recommend adding them to the purchase agreement. I know of a listing agent who said it was not possible for him to help pay for the home warranty for the seller. Why not? The agent’s line of reasoning was that he felt he had already put in too much in marketing the property, yet the deal was about to fall apart because the seller was stubborn and would not pay for it. I just can't believe that some agents won't pay for the warranty just to help close the deal—especially if other parties in the transaction are hard-headed and everyone wants to stand their ground at the expense of having the deal crumble.

The price range of most Home Warranties are around $300 – $450, which I don't think is that much. It's funny how some agents step over the dollars to get to the dimes. As listing or selling agents, it would make sense to help pay for this cost as it is minimal and it makes the parties involved in the transaction happy.

There are listing agents getting creative by stating upfront that they will pay for the Home Warranty to give to the buyers if the Sellers list their homes with them. I think this is a great marketing incentive but I don't know how effective it is. As a listing agent, do you usually pay for the Home Warranty to give to the Buyers?

The above question is what I posed to the real estate agents at a forum. I’ve summarized below the many responses from those who replied to the question. One agent responded that she agreed that many agents step over the dollars to get to the dimes and she makes whatever adjustments and credits are needed to close out the transaction successfully. Another agent indicated she pays for home inspections on the buyer side and her broker offers to pay for the home warranty. A few agents indicated the home warranty is a common staple in all their listings. They feel that for the cost, it is better to have it just in case any future problems arise. Several agents stated they offer to pay for the warranty as an incentive to get the listing and to increase the perceived value of the listing in the eyes of the prospective buyers.

Agents also expressed opposing views on buying the home warranty for the sellers and instead, they always urge their sellers to pay for it and they explain the advantage of getting the warranty as it protects the sellers. In fact, they will suggest that the seller include the warranty for the listing period since it makes the home easier to sell and many buyers are going to ask for it anyways. There were some cases cited where the sellers paid the $300-400 for the warranty, and they ended up requesting more than that cost in repairs from the warranty company during the listing period. So, overall in these cases, the sellers actually saved money by having the warranty in place since they would have otherwise had to pay for the repairs out of their own pocket. It is commonly believed that many sellers will have no issues with taking on the home warranty since they are aware of their expenses in selling a home.

Overall, the consensus among the real estate agents was that if it was between getting a deal closed now or waiting for a new buyer, have no reservations about covering the warranty. Although, they would probably try to get the other agent to split the costs since many times, most agents will help with the home warranty costs if the seller refuses to pay for it. Should the selling agent refuse, the listing agent would pay for it just to get the deal done. As a part of skillfully putting together a transaction that meets everyone’s needs, if it makes sense for the listing agent to pick up the tab, they will take on the expense.

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