Selling a home? A home warranty could help close the deal.

• Sellers are increasingly offering home warranties to differentiate their properties in a cooling housing market.
• Offering a warranty can help reduce negotiation friction after a home inspection reveals potential issues.
• A home warranty can provide peace of mind to buyers and protect sellers from post-sale complaints.

A failed appliance or a dying air conditioner can kill a home sale fast, and it happens more often than most sellers expect. “Nationwide, the average annual frequency of failure for a home’s appliances and systems is 160%,” says Jim Mostofi, CEO of Choice Home Warranty in Edison, New Jersey. “That means an average home will have a system failure 1.6 times per year.”

A home warranty for sellers won’t prevent breakdowns, but it can soften the blow. Here’s what it covers and why more are using it as a competitive edge.

What happens to home sales when the market cools?

Before getting into what a home warranty does, it helps to understand the environment you’re selling into.

In a buyer’s market, homes sit longer, price cuts become common and buyers grow selective about every detail. “Anything that tamps down buyer enthusiasm (like a home’s age or condition) will result in lower sale prices and longer days on market,” Seb Frey, a broker associate with Compass Silicon Valley in California, notes.

And with consumer sentiment at record lows, committing to a 30-year mortgage takes real conviction right now. That has pushed sellers and listing agents to look for ways to differentiate their properties, explains Marty McClendon, a designated broker for HomeSmart in Montgomery, Texas. “That could include seller concessions, appliances or a home warranty,” he says.

What is a home warranty, and why should sellers care?

A home warranty is a service contract that covers the repair or replacement of major systems and appliances if they break down.

It typically covers these items:

• HVAC (heating and cooling systems)
• Plumbing and electrical systems
• Kitchen appliances
• Water heaters
• Optional add-ons, such as pool and spa equipment, guest units and freestanding ice makers

For sellers, it’s also a liability shield. Once a sale closes, everything in the home becomes the buyer’s responsibility. But not every buyer sees it that way. “It’s common for a maintenance issue to crop up within the first year, and many buyers will think the seller is responsible,” Frey warns. A home warranty redirects that frustration away from the seller and toward the warranty provider.

How home warranties help homes sell faster

Every day a home sits on the market costs the seller money. Based on 2024 U.S. Census data, the median monthly cost of homeownership (including mortgage, taxes, insurance and fees) runs about $2,035 — or roughly $68 a day. Mostofi estimates that a home warranty can accelerate a sale by 45 days. At $68 a day, that’s about $3,052 in carrying costs avoided on an investment of roughly $825.

A home warranty can also attract more interested buyers and support a stronger asking price. Every transaction is different, but Mostofi puts the overall return on investment for sellers at around 300%.

Reducing negotiation friction and post-inspection fallout

Many older homes reveal a long list of “deficiencies” that can alarm buyers, often leading to demands for price reductions of $15,000 to $20,000.

“Home inspections can make it seem like the whole house is a money pit,” Frey points out. “But a home warranty gives buyers protection from large maintenance expenses, at least in the first year.” For sellers, that means fewer lowball offers and less pressure to cut the asking price.

Home warranty vs. price reductions vs. seller credits

A home warranty is a useful tool, but it has a limited scope. “You’re not going to placate many buyers with a $1,000 warranty for a $20,000 problem,” Frey cautions.

Sellers have a few levers to pull depending on the situation:

• A price reduction is best when a home has been on the market for a while. It refreshes the home’s visibility on the MLS (the database agents use to list and search homes) and puts it in front of new buyers.
• A seller credit is best for addressing specific, known issues. Examples include a roof that needs replacing or buyer-closing-cost assistance.
• A home warranty is best for covering unknowns and giving buyers confidence in the home’s systems and appliances going forward.

“Pricing the home correctly is the most important thing,” says McClendon. “But adding a home warranty brings value and peace of mind to the purchase.”

Best situations to offer a home warranty

A home warranty isn’t necessary in every sale, but it makes sense in most. Frey and McClendon agree that new construction is the exception, since builder warranties and appliance manufacturer warranties already provide that coverage.

Consider offering a home warranty in these situations:

• The home is several decades old. Aging systems and appliances tend to raise red flags during inspections, giving buyers pause — and negotiating power.
• The home has been on the market for a while. A warranty won’t fix a pricing problem, but it can remove buyers’ doubts about an older or well-worn property.
• Negotiations are getting rocky. Rather than caving to a price reduction, a warranty can defuse tension over condition concerns. “It can more than pay for itself even before escrow closes,” Frey notes.
• You’re dealing with a resale home. McClendon recommends including a home warranty for every resale (a property or home previously lived in) transaction. The peace of mind it offers buyers is hard to replicate with other concessions.

How agents can use home warranties as a marketing tool

For listing agents, a home warranty is a low-cost way to stand out. Frey offers one to every seller client as part of his listing presentation. “It costs nothing to order and differentiates me from other agents out there,” he says. McClendon uses it the same way, particularly on older properties where buyer hesitation tends to run highest.

At its core, a home warranty signals confidence in the home, in the transaction and in the agent representing it. In a market where buyers are cautious and deals are harder to close, that kind of reassurance carries meaningful weight.