As a real estate professional, you probably already know that home warranties can serve many valuable purposes in real estate transactions. Home warranties can help market properties, offer reassurance to prospective buyers, and help homeowners protect their budgets when many common household breakdowns occur on covered items. In addition to knowing the advantages, do you know how to explain home warranty coverage to your clients? Here’s a quick explanation to help.

  • A home warranty is a service agreement, often for one year, that covers the repair or replacement of many major home system components and appliances that break down over time due to normal wear and tear.
  • A home warranty is not the same as a homeowners insurance plan, which typically protects homes from potential events like fires, theft, or natural disasters. While a home warranty is a good complement to standard homeowners insurance, it’s not a substitute for it.

Depending on the plan, most home warranties require an annual or monthly fee as well as a service call fee that is due per contractor specialty to diagnose a covered problem or to perform service. Knowing these costs in advance can help homeowners budget for many of the inevitable household breakdowns that always seem to occur at the worst possible times. In some cases, there could be additional costs associated with covered repairs or replacements, so always advise your clients to thoroughly review their home warranty contract for details to avoid surprises.

In addition to helping protect homeowners’ budgets, home warranties can also offer homeowners a reliable resource for repair help when breakdowns occur on covered items. Home warranty customers are given a number or website to contact for repair requests, which can save homeowners valuable time when seeking a qualified contractor. Home warranty companies, such as American Home Shield®, go the extra mile to monitor and grade contractors on their performance through customer satisfaction surveys.

For more helpful tips, visit the American Home Shield® Home Matters blog.