Should You Offer a Home Warranty When You Sell Your Salt Lake County Home?

A seller-paid home warranty can help a listing, but it is not a repair fund and it does not replace an inspection. It is a service contract that covers certain systems and appliances for a set period after closing, with a fee for each service call. Whether it is worth the cost depends on the age of your home, what buyers are asking for, and what the contract excludes.

Charisse Walker is a real estate agent with Chalker Properties Group in Salt Lake and Davis County, Utah, and a licensed mortgage lender. She walks sellers through the trade-off before they agree to one, because the best use of the money is not always a warranty.

Below: what these plans cover, what they leave out, when they help a sale and when another choice works better.

Homeowner's insurance covers sudden damage like a fire or a burst pipe. A home warranty covers the breakdown of covered systems and appliances from normal wear, such as a furnace that stops working or a dishwasher that fails.

A warranty is a contract between the homeowner and a warranty company. When something covered breaks, the homeowner calls the company, which sends a contractor. The homeowner usually pays a service fee for each visit. The company decides whether to repair or replace, and the coverage limits are written in the contract.

Warranties are sold in a few forms. Some are bought by the owner. Some are bought by the seller for the buyer as a listing incentive, often starting at closing and running a year. Some are ordered by the buyer's agent at the buyer's expense.

Plans differ by company and by tier, so read the actual contract for the plan you are considering. Common covered items include heating and cooling, plumbing, electrical systems, water heaters and major kitchen appliances. Common exclusions are worth knowing about before you advertise a warranty:

• Pre-existing conditions. Many contracts exclude problems that existed before the coverage started. That matters because a buyer's first claim is often on something that was already worn out.
• Improper maintenance. A claim can be denied if the company decides the failure came from a lack of upkeep.
• Dollar limits. Many plans cap what they pay per item or per category.
• Code upgrades and permits. The cost of bringing a repair up to current code may not be covered.
• Cosmetic and structural items. Roofs, foundations and finishes are commonly left out, or sold as optional add-ons.

This is why it helps to look at the actual terms. A warranty is only as good as the contract language.

A warranty makes the most sense when it answers a specific worry a buyer already has. Some examples of situations where sellers choose to offer one:

• The home has older systems that still work. A furnace or water heater near the end of its expected life can make a buyer nervous. A warranty gives the buyer a plan for a failure, though a pre-existing condition clause can limit it.
• The buyer is stretching their budget. A first-time buyer who has put most of their savings into the down payment may value a path for the first surprise repair.
• The home is a condo or townhome with fewer owner-maintained systems. Coverage for appliances can be the main thing a warranty adds.
• The listing has been sitting. It is a small, low-pressure concession that can show a seller is paying attention to buyer concerns.

It helps least when the real objection is price, condition or a large visible repair. A warranty will not fix a roof buyers can see is worn, and buyers who have read the exclusions know it.

Before you spend money on a warranty, compare it with the other ways to deal with the same buyer concern:

1. Fix the known problem. If the furnace is failing, replacing it gives a buyer certainty that a warranty cannot.
2. Order a pre-listing inspection. Knowing about issues before the buyer's inspector finds them lets you choose how to handle each one. The home inspection guide explains what an inspection covers.
3. Offer a credit. A negotiated credit at closing lets the buyer use the money on whatever matters most to them.
4. Document maintenance. Receipts for furnace service, a sewer line cleaning or a water heater flush show a buyer the house has been cared for.
5. Adjust the price. Sometimes the honest answer is that the price should reflect the condition.

A warranty can sit alongside any of these. It does not need to be the whole plan.

Pricing varies by company, plan level and home size, and I am not going to quote a figure that may not match what you find. Ask for a written quote for the exact plan, including the service call fee and the limits per item. Then compare it with what a buyer could reasonably ask for as a credit.

On who pays: it is negotiable. A seller can offer to pay for a warranty, a buyer can ask for one, and the choice goes into the purchase contract. Nothing requires either side to do it. If you offer a warranty, put the company name, the plan and the term in the contract so there is no confusion at closing.

• Buying the cheapest plan without reading it. A low-priced plan with narrow coverage can disappoint the buyer you meant to reassure.
• Using it to cover a defect they know about. If you know a system is failing, you may have a disclosure duty, and a warranty does not replace disclosing it.
• Advertising it as a repair guarantee. It is a service contract with limits. Describe it accurately.
• Not telling the buyer how to use it. At closing, give the buyer the contract, the phone number and the date coverage begins.
• Ignoring the better use of the money. The same amount may buy a repair that a buyer will notice.

Here is a typical example, not a client story. A seller in a Murray townhome has a furnace that is fifteen years old and still runs. The first buyer who tours asks whether it has been serviced. The seller has no records.

The seller has several options. They can pay a heating contractor for a service visit and keep the invoice. They can offer a warranty with heating coverage and note the contract's pre-existing condition language. They can offer a small credit instead. Each solves a slightly different worry, and which one fits depends on the buyer and the budget.

The mistake would be buying a plan after the first complaint, without reading what it covers, and then using it as the answer to every objection.

Is a home warranty required to sell a home in Utah? No. It is optional and negotiated between buyer and seller.

Does a warranty cover everything an inspector finds? No. Many contracts exclude pre-existing conditions and have dollar limits, so read the terms.

Can a buyer cancel the warranty? That depends on the company's contract. Ask before you commit.

Does a warranty increase my sale price? Not by itself. It can make a listing feel less risky to some buyers, but it does not change the condition of the house.

Should I offer one with an as-is sale? It can be a way to give buyers a little reassurance while keeping the price and terms of an as-is sale. The as-is selling guide covers the rest.

Charisse Walker is a real estate agent with Chalker Properties Group in Salt Lake and Davis County, Utah, and a licensed mortgage lender. When she is your agent, she compares a warranty with the other options for your home and your buyers, then helps you decide where the money does the most work.

If you are getting ready to list, the selling your home page lays out the steps, and the Murray area page and Sandy area page compare those cities on price trends and housing stock. The process page shows how a sale moves from listing to closing.

Thinking about what to offer buyers? Contact Charisse and talk through your options before you list.