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 data from Angi, it's most common for the seller to pay for the home warranty as part of a real estate transaction, though either party can opt to cover it depending on the deal. Seller concessions — which include home warranties — appeared in 44.4% of U.S. home sales in a recent quarter, up from 39.3% the year prior, as sellers increasingly use low-cost incentives to compete without slashing their list price.

Regional Variations Across the U.S.

While the seller-pays norm holds broadly across the country, there are subtle regional differences in how common or expected the practice is:

• Southeast (e.g., Florida): Seller-funded warranties are standard, with some agents even including complimentary listing-period coverage as part of their services. Florida agents commonly offer coverage starting around $60 for the seller's listing period.
• Northeast (e.g., New York/New Jersey): Home warranties are less common as a seller concession in dense urban markets like Staten Island, where closing cost credits tend to be preferred. A $400–$800 warranty may still be offered but is less expected.
• Southwest & Sun Belt: In hot and competitive markets across Texas and Arizona, sellers in slower micro-markets lean on warranties to differentiate listings. In heated markets, buyers may need to purchase their own.
• 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 — 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–$800, 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 offer free listing-period coverage when the seller commits to activating a buyer plan at closing — meaning 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 gradually rebalancing market where inventory is rising and sellers are more motivated to offer concessions.

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.
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–$10,000 price drop.

Splitting the Cost

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

• Seller pays for a basic plan ($350–$500/year); 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
• 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, the average home warranty costs $73/month (roughly $876/year), with service fees ranging from $75–$135 per 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. Deductible selling expenses are limited to items like real estate commissions, escrow fees, legal fees, and advertising. The seller can still exclude up to $250,000 ($500,000 married filing jointly) of capital gains on a primary residence, but the warranty cost doesn't reduce that gain.
• 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:

• Gradually rising inventory — giving buyers more leverage than in 2021–2023
• Modest home price growth of 1–5% nationally — slower than the pandemic-era spikes
• Mortgage rates near 6.3% — still elevated, keeping buyers cautious about post-purchase costs
• Home maintenance costs averaging $8,808/year — making warranty protection more appealing than ever

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 10–15 years old
• Both sides recognize that a $400–$800 warranty is a low-friction concession that helps keep deals together post-inspection

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.

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, it's increasingly negotiable, and both parties should be prepared to discuss it.

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

Yes, and it's a very common practice. 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 — $400–$800 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 may qualify as a deductible business expense.

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

In 2026, a standard one-year home warranty plan costs between $350 and $1,050 annually depending on coverage level and the size of the home. Most basic plans covering major systems and appliances fall in the $400–$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.