Who Pays for Home Warranty: Buyer or Seller? How to Negotiate in 2026

Who Typically Pays for a Home Warranty?

In most U.S. real estate transactions, the seller pays for the home warranty, but this isn't a hard rule. Market dynamics, regional customs, and negotiation leverage all play a role in determining who ultimately covers the cost. Understanding how home warranties work in real estate puts you in a much stronger position whether you're buying or selling.

The most straightforward breakdown looks like this:

According to the latest Redfin data, home sellers gave concessions to buyers in 46.2% of U.S. home sales in May, up from 43.1% a year earlier and the highest share for that month in Redfin's records. Concessions like home warranties have become a mainstream deal-structuring tool as sellers use low-cost incentives to compete without slashing their list price. Industry data shows that home warranties are not required but are described as a popular seller-paid incentive, especially in competitive markets or with older homes, so buyers often need to ask for one directly to make it part of the deal.

Regional Variations Across the U.S.

While the seller-pays norm holds broadly across the country, Redfin's May 2026 concession data reveals dramatic regional differences:

• Sun Belt (concession-heavy markets): Nashville home sellers gave concessions to buyers in three-quarters (75.5%) of homebuying transactions in May, the highest share among the 28 major U.S. metros included in this analysis. Next are Charlotte, NC, where 71.4% of sellers gave concessions to buyers, Atlanta (68.7%), Phoenix (65.6%) and Raleigh, NC (64.1%). Seller-funded warranties are common negotiating tools in these buyer-friendly metros.
• Northeast and West Coast (low-concession): Concessions were least common in New York, where just 2.9% of home sellers gave concessions to buyers in May, the lowest share in the U.S. Next come two Bay Area metros: San Jose (5.9%) and San Francisco (14.9%), followed by Boston (26.7%) and Chicago (27.5%). A $400 to $900 warranty may still be offered but is far less expected.
• Southeast (e.g., Florida): Seller-funded warranties are standard, with agents often bundling complimentary listing-period coverage. In most states, a seller's home warranty is a component of the buyer's home warranty plan, so there is no separate cost for seller's coverage. However, in Florida and California, a seller's home warranty plan does cost extra.
• Midwest: Seller-paid warranties are fairly common, especially on older homes with aging systems and appliances where buyer hesitation runs high.

Negotiation Strategies: Seller's Perspective

Sellers who proactively offer a home warranty gain a meaningful competitive edge. Offering a warranty when selling your home can help homes sell up to 11 days faster and reduce post-inspection renegotiations, two costly friction points in any deal.

Why Sellers Should Offer One

• Reduces buyer hesitation on older homes or homes with aging HVAC, plumbing, or appliances
• Lowers risk of post-inspection repair demands because buyers feel more protected knowing a warranty is in place
• Provides seller coverage during listing. If a covered system breaks before closing, the seller typically only pays the service fee, not the full repair bill
• Competes without cutting price. At $400 to $700, a warranty is far cheaper than dropping the list price by even 0.5%

How to Include It as a Seller Concession

Sellers can work with their real estate agent to include a home warranty as a named seller concession in the listing. Many home warranty providers, including American Home Shield and First American, offer free listing-period coverage when the seller commits to activating a buyer plan at closing. With American Home Shield, for example, sellers can add the Seller Coverage Option to the plan they'll provide to the buyer. It includes the same items as ShieldEssential (heating, air conditioning, plumbing, and electrical) and can protect the seller for up to six months while the home is on the market, with payment collected at closing. The warranty then transfers to the buyer and becomes effective the day of closing. That means the seller pays nothing upfront and only the annual premium is deducted from closing proceeds.

Real estate agents who are familiar with home warranty programs and partnerships can often help sellers access discounted plans and streamline the transfer at closing.

Negotiation Strategies: Buyer's Perspective

Buyers have real leverage to request a seller-paid home warranty, especially in today's rebalancing market where national active listings are up about 8% year over year between late February 2025 and late February 2026, though national active inventory is still about 17% below pre-pandemic 2019 levels. Combined with record-high seller concessions, this shifts leverage back toward buyers across most metros.

How to Ask the Seller to Pay

1. Include it in your initial offer. Add specific contract language such as: "Seller to provide and transfer a one-year home warranty at closing, covering major systems and appliances." This puts the expectation on the table from the start.
2. Use it as post-inspection leverage. If the home inspection reveals an aging HVAC unit or older water heater, request a warranty instead of (or in addition to) a price reduction. It's often more palatable for sellers than cash concessions.
3. Bundle it strategically. If the seller pushes back on closing cost credits, suggest swapping or combining with a home warranty. It's a non-cash concession that still delivers real value. Learn more about home warranty negotiation tactics that work in 2026.
4. Frame it as a mutual win. Remind the seller (through your agent) that a $600 warranty is a far smaller ask than a $5,000 to $10,000 price drop.

Splitting the Cost

In some transactions, the cost is split. For example:

• Seller pays for a basic plan ($350 to $500/year), and buyer upgrades to a more comprehensive tier at their own cost
• Agent covers the cost as a client gift or closing incentive, a common practice among buyer's and seller's agents alike. Real estate agents are one of the most common purchasers of home warranties for home buyers, and many agents buy their buyers home warranty coverage as a gift at closing
• Buyer pays service fees while seller covers the annual premium

Understanding the full cost of a home warranty helps both parties negotiate from an informed position. In 2026, a home warranty costs $73 a month on average, but the price of a plan can range from as low as $28 to as high as $191 per month. The average monthly fee for a home warranty plan is $73 which comes out to $876 a year. Service fees can add to the cost, averaging $108.45 per service call.

Tax Implications, Market Conditions & Agent Perspectives

Tax Implications: What You Need to Know

Neither buyers nor sellers get a significant tax benefit from a home warranty on a personal residence:

• Sellers: The IRS does not allow the cost of a home warranty to be deducted as a selling expense when calculating capital gain or loss. The costs the homeowner can deduct are state and local real estate taxes, subject to a $40,000 limit or $20,000 if married filing separately, and home mortgage interest within the allowed limits. Insurance, home repairs, and most closing costs (functionally what a home warranty covers) are excluded.
• Buyers: No tax deduction is available for a home warranty paid on a personal home. It is not treated like mortgage interest or property taxes.

How 2026 Market Conditions Affect Negotiations

The 2026 housing market is characterized by:

• Rising inventory, up roughly 8% year over year nationally, giving buyers more leverage than at any point since 2020
• Modest home price growth. J.P. Morgan Global Research sees U.S. house prices stalling at 0% in 2026, with a slight improvement in demand likely offsetting any increased supply
• Mortgage rates still elevated. While fixed-rate mortgage rates are projected to stay elevated at 6+%, adjustable-rate mortgage (ARM) rates could tick downward if the Fed decides to ease. Homebuilders are continuing to offer rate buydowns to help move their inventory
• Record-high seller concessions at 46.2% of May 2026 sales, per Redfin
• The median existing-home price in May 2026 hit a record $429,300, with existing-home sales rising 3.2% and reflecting solid fundamentals plus ongoing supply constraints

This environment makes a seller-paid home warranty one of the most efficient tools available. It costs the seller relatively little while addressing one of the buyer's biggest concerns: what happens if something breaks right after moving in?

Real Estate Agent Perspectives

Experienced agents on both sides of the transaction use home warranties strategically:

• Listing agents recommend sellers activate a warranty during the listing period to avoid out-of-pocket repair costs that could derail a deal
• Buyer's agents routinely include warranty requests in offer packages, especially for homes more than 10 to 15 years old
• Both sides recognize that a $400 to $900 warranty is a low-friction concession that helps keep deals together post-inspection. The Sun Belt is leading the way for regions offering concessions, mainly because the once red-hot housing market in those areas appears to be slowing down as the number of sellers outpace the number of buyers, giving buyer's agents more room to ask for extras

For a deeper look at how the transfer process works at closing, including paperwork and fees, review your provider's terms before making it part of your offer. And if you're still deciding whether a warranty makes sense at all, compare the financial tradeoffs between a home warranty and self-funding repairs before committing. First-time buyers should also review our dedicated first-time buyer warranty guide to understand which negotiation points matter most on your first purchase.

Frequently Asked Questions

Does the buyer or seller typically pay for a home warranty?

In most U.S. real estate transactions, the seller pays for the home warranty as a concession to attract buyers and help close the deal. However, in competitive seller's markets where demand outpaces supply, buyers more often purchase their own warranty. In 2026's rebalancing market, with 46.2% of May sales including concessions per Redfin, it's increasingly common for sellers to cover it.

Can a buyer request a home warranty as part of their offer?

Yes, and it's a very common practice in 2026. Buyers can include specific contract language requesting the seller provide a one-year home warranty at closing. It's most effective when framed as a modest ask relative to the purchase price, roughly $400 to $900 versus a potential $5,000+ price reduction, and is particularly compelling when paired with post-inspection findings on older systems.

Is a home warranty tax deductible for the seller?

No. The IRS does not allow home warranty costs to be deducted as a selling expense when calculating capital gains or losses on the sale of a personal residence. Deductible selling costs are limited to items like agent commissions, escrow fees, and legal expenses. The only exception is for rental or investment properties, where home warranty costs qualify as a deductible business expense on Schedule E.

How much does a seller-paid home warranty cost at closing?

In 2026, a standard one-year home warranty costs between $350 and $900 annually depending on coverage level and home size, with the national average around $73 per month or $876 per year per NerdWallet. Most basic plans covering major systems and appliances fall in the $400 to $700 range. The cost is typically deducted from the seller's proceeds at closing, so there's no upfront out-of-pocket expense for the seller.

What should be included in a home warranty as a seller concession?

At minimum, the warranty should cover major systems (HVAC, plumbing, electrical) and key appliances (refrigerator, dishwasher, oven, washer/dryer). Both parties should agree on the provider and plan tier in writing, with the contract specifying that coverage transfers to the buyer at closing. For older homes, buyers may want to negotiate add-ons like water heater coverage, roof leak protection, or pool/spa equipment.