Home warranties are an important component in the purchase of one-to-four unit residential dwellings, and are especially helpful to first-time homeowners who don’t know who to call when that first minor home emergency hits. These plans are designed to eliminate the headaches and high costs associated with unforeseen breakdowns, and make it fairly easy for a buyer to repair malfunctioning mechanical systems and appliances included with their property.

However, what some buyers may not understand is that these policies cover damages and breakdowns which occur after the acquisition of the property due to the normal wear and tear caused by operating these systems throughout the years, and that there are limitations to coverage.

In order for your buyers to get the full benefit of home warranties, follow these easy tips:

  1. Discuss home warranties with your buyer before writing up the offer. Explain what home warranties do and make sure your buyer knows different coverage options are available. Even though the seller customarily pays it, the buyer can determine the coverage they want.
  2. Present your buyer with a brochure from a home warranty company to give them an idea of the plans and options available.
  3. Encourage your buyers to ask the home inspector questions about specific components of the property during the home inspection to better understand the coverage they’ll need — “How long will this water heater last?  What about the HVAC unit?”
  4. Make sure your buyers carefully read and understand the warranty contract and the limitations of their chosen coverage.

This will prevent future phone calls from unhappy buyers when their household appliances malfunction: “Is your refrigerator running? Because mine’s NOT!

This article was originally posted October 29, 2013 and has been updated.