When you're buying or selling a home, there’s no shortage of decisions to make—one of the most commonly misunderstood is whether or not to purchase a home warranty. While not required like homeowners insurance, home warranties can provide valuable peace of mind in the right circumstances.
This guide breaks down what home warranties actually cover, who benefits from them, when they make sense, and how Lockstep Realty—brokered by eXp Realty—helps clients navigate the decision with clarity and confidence.
What Is a Home Warranty?
A home warranty is a service contract that pays for the repair or replacement of major home systems and appliances that break down due to normal wear and tear. Unlike homeowners insurance, which protects against disasters like fire or theft, a home warranty covers internal systems like your furnace, AC, or dishwasher.
These warranties typically last for one year and may be purchased by buyers, sellers, or even gifted by real estate agents at closing. Annual premiums usually fall between $400–$700, with a per-visit service fee ranging from $60–$100.
Why Buyers Consider Home Warranties
For first-time buyers, especially those on tight budgets, a home warranty offers a cushion against surprise repairs early in homeownership.
Key benefits for buyers:
Helps with budgeting by reducing unexpected costs
Provides reassurance if appliances or systems fail
Supports less experienced buyers with system maintenance
Imagine this: it’s your first summer in Indiana and your AC goes out. Without a warranty, that could cost $3,000 or more. With one? You might only pay a $75 service fee.
Why Sellers Offer Home Warranties
For sellers, a home warranty can be a strategic tool to add value and confidence during the sale process—especially in slower or more competitive markets.
Advantages for sellers:
Can make listings more attractive to cautious buyers
May reduce friction during inspection negotiations
Often covers needed repairs during the listing period
If a dishwasher breaks right before closing, a seller-provided warranty might cover it—preventing last-minute deal stress.
What’s Covered (and What’s Not)
Coverage varies by provider, but most plans offer protection for key systems and appliances. However, exclusions can be significant.
Commonly Covered:
HVAC systems
Plumbing and electrical systems
Water heaters
Dishwashers, ovens, and built-in microwaves
Clothes washers and dryers (sometimes optional)
Commonly Excluded:
Pre-existing conditions
Improper installation or maintenance
Roofs and foundations
Cosmetic issues (e.g., dents, scratches, rust)
Read the fine print. Many denied claims happen because homeowners didn’t know the limits of their coverage.
Are Home Warranties Worth the Cost?
The answer depends on the home, the homeowner, and the provider. At an average annual cost of $400–$700 plus service fees, a warranty can quickly pay for itself after just one significant repair.
Factors to consider:
Age and condition of appliances and systems
Your ability to pay out-of-pocket for major repairs
Whether you’re buying new construction or an older home
Reliability of the warranty provider
According to the Federal Trade Commission (https://consumer.ftc.gov/articles/home-warranties), evaluating the fine print and reputation of your warranty provider is essential. Not all companies handle claims equally, and some exclude common issues.
Red Flags and Industry Complaints
Unfortunately, the home warranty industry has its fair share of criticism. Many consumers report frustrations related to denied claims, delays, or vague contract language.
Common complaints:
Limited network of service providers
Repairs delayed due to poor scheduling
Claims denied due to technical loopholes
Poor communication from warranty companies
For that reason, it’s critical to research providers using resources like the Better Business Bureau (https://www.bbb.org/) and Consumer Reports (https://www.consumerreports.org/).
When a Warranty Makes Sense
Home warranties can be an excellent decision in certain situations—but they’re not for everyone. Here’s when they typically add the most value:
Best for:
First-time homeowners unfamiliar with system upkeep
Buyers purchasing older homes with aging appliances
Sellers looking to sweeten the deal for buyers
Homeowners who value peace of mind and predictability
Not ideal for:
Brand-new homes with builder warranties
DIY-savvy owners who prefer to fix things themselves
Buyers with large emergency funds who can self-insure
Home Warranty vs. Homeowners Insurance
It’s important not to confuse these two.
Homeowners insurance covers your home against hazards like fire, storm damage, or theft.
Home warranties cover normal wear and tear on household systems and appliances.
They serve very different functions—and for many buyers, having both provides a fuller safety net.
Smart Questions to Ask Before Buying
What exactly is covered under the standard plan?
Are there caps on coverage amounts?
Can I choose my own contractor?
What is the average claim denial rate for this provider?
How fast is the typical response time for service requests?
Asking the right questions upfront helps you avoid surprises when something breaks.
How Lockstep Realty Helps
At Lockstep Realty, we’re committed to helping our clients make strategic, informed decisions—not selling one-size-fits-all products. We approach home warranties with full transparency and help both buyers and sellers evaluate:
Whether a warranty fits their home’s age, systems, and budget
Which providers have the strongest reputations and fastest response times
How to interpret contract language and coverage limits
Whether a warranty will actually enhance the deal—or just add complexity
Our team has walked clients through successful claims and also through frustration when warranties underdeliver. Our experience helps ensure you enter any agreement with full confidence.
We’re a team brokered by eXp Realty, and we believe real estate is about relationships—not just transactions. That means guiding you well after the ink is dry.
Frequently Asked Questions
Do home warranties cover roof repairs?
Usually not. Unless optional roof coverage is added, most plans exclude roofs entirely.
Can I get a home warranty after closing?
Yes. Many companies allow you to purchase a plan post-closing. However, coverage may be delayed slightly before it kicks in.
Is a home warranty required by lenders?
No. Home warranties are optional. Homeowners insurance is typically required, but warranties are a personal choice.
What’s the difference between a service fee and a deductible?
They’re often the same thing. A service fee is paid every time a technician visits your home for a claim—usually $60–$100.
Should I buy from the cheapest company?
Not necessarily. Focus on coverage details and reputation. A low-cost plan that doesn’t pay out isn’t a good value.
Final Thoughts
Home warranties can be a smart addition to your real estate journey—but they aren’t magic solutions. The key is to understand your home, your budget, and your comfort level with potential repairs. Then, evaluate the warranty like any other financial decision: on its actual value, not just its promise.
Whether you’re a buyer looking for peace of mind or a seller trying to offer a better deal, Lockstep Realty is here to help you decide if a home warranty fits your real estate goals.
