In a home sale, either the buyer or the seller can order the home warranty, and which one does comes down to what the purchase agreement says. In most residential transactions the seller orders it and pays for it as a closing-cost concession, but buyers routinely order their own when the seller declines or when they want a specific provider or plan. A basic plan runs roughly $300 to $700 a year, plus a service fee each time a technician comes out.
When the Seller Orders It
Sellers order warranties for two practical reasons: attracting buyers and limiting post-sale headaches. A warranty signals that the seller stands behind the home’s condition, which can tip the scales for buyers comparing similar listings. It also redirects repair calls away from the former owner and toward the warranty company, reducing the chance a frustrated buyer calls months after closing.
When sellers offer a warranty, they typically handle the ordering themselves or have their listing agent coordinate it. The premium is folded into closing costs, so the seller doesn’t write a separate check. Some sellers go a step further and activate the warranty during the listing period. That gives them coverage on major systems while the home sits on the market, so if the furnace dies two weeks before closing, the warranty company covers the repair instead of the seller paying out of pocket or risking a blown deal after the inspection.
When the Buyer Orders It
Buyers end up ordering their own warranty when the seller refuses to include one, when the market favors sellers, or when the buyer wants a specific provider or coverage level the seller didn’t offer. Older homes with aging HVAC systems, water heaters past their expected lifespan, or original plumbing are the situations where buyers benefit most from the protection.
A buyer who orders independently has more control over the plan. You can shop providers, compare service fees, add optional coverage for things like pools, septic systems, or well pumps, and choose a premium tier that matches your risk tolerance. The tradeoff is that you pay the full cost yourself rather than getting it as a seller concession.
How It Gets Decided
The warranty conversation usually happens at the offer stage. Buyers include a request for a home warranty in the purchase agreement, and the seller either accepts, counters with a lower-cost plan, or declines. The real estate agents on both sides typically handle the back-and-forth. Once agreed, the terms get documented in the purchase agreement or in a separate addendum spelling out which party pays, the coverage level, and the provider. That document controls who pays, regardless of who physically places the order with the warranty company.
Market conditions drive most of the leverage. In a buyer’s market with plenty of inventory, sellers routinely throw in warranties to sweeten the deal. In a competitive seller’s market, buyers often drop the warranty request to keep their offer clean.
If the seller already has an active warranty on the home, transferring it to the buyer is sometimes an option. Providers that allow transfers typically charge an administrative fee of about $25 to $50, usually handled as a closing cost.
What the Ordering Party Is Paying For
A basic plan covering major systems and appliances runs roughly $300 to $700 per year. Premium plans with broader coverage or higher payout limits can push past $1,000. On top of the annual premium, there’s a service fee every time a technician visits to diagnose or repair a covered item, typically $65 to $150 per visit depending on the provider and tier. Lower service fees generally come with higher annual premiums, and vice versa.
Most warranties also impose per-item coverage caps, often $1,500 to $3,000 per appliance and $3,000 to $5,000 for major systems like HVAC. Many plans add an aggregate annual cap, commonly in the $25,000 to $50,000 range. Once you hit that ceiling, you’re on your own until the plan renews. Premium tiers sometimes advertise unlimited aggregate coverage, which matters most for older homes where multiple systems could fail in the same year.
What a Home Warranty Won’t Cover
Before anyone commits to ordering, it’s worth knowing what the policy won’t pay for. Home warranties cover breakdowns from normal wear and tear. Everything else sits in a long list of exclusions.
- Pre-existing conditions. If a system was already malfunctioning before the warranty started, the claim gets denied.
- Improper maintenance. Skipping routine tasks like replacing HVAC filters, draining the water heater annually, or cleaning dryer vents can void coverage.
- Improper installation or code violations, even if a licensed professional did the original work.
- Secondary damage. A warranty might fix the dishwasher that overflowed but won’t pay for the warped flooring the water ruined.
- Items still under a manufacturer warranty.
- Cosmetic issues like scratches, dents, and surface damage.
- Pest and animal damage, including rodents chewing through electrical wiring.
- Unauthorized repairs. If you call your own repair person instead of going through the warranty company’s process, you’ll likely forfeit coverage on that item.
When Coverage Actually Starts
For warranties purchased as part of a real estate transaction, coverage generally begins on the closing date with no waiting period. That’s an important distinction from standalone purchases made outside a sale, where most providers enforce a 30-day waiting period before coverage kicks in. If you buy a warranty on your own after you’ve already moved in, expect that gap.
If the Home Is a Rental
When the property is an investment rather than a primary residence, the buyer has an extra reason to order the warranty themselves: the premium is deductible as a rental expense. The IRS allows landlords to deduct ordinary and necessary expenses for managing and maintaining rental property, and insurance premiums fall into that category. You report the cost on Schedule E along with other rental expenses like property management fees and repairs.1IRS. Publication 527 (2025), Residential Rental Property
For a primary residence, home warranty costs aren’t tax-deductible. They’re treated as a personal expense, the same as homeowner’s insurance or a maintenance contract on your furnace. The deduction only applies when the property generates rental income.