Home Warranty Catch You Should Know

Some sellers are hoping to hook a buyer by offering a one-year home warranty to cover repair costs for items such as appliances, electricity, or plumbing. The tactic, which is gaining popularity, is meant to give buyers peace of mind that they won’t have to shell out cash for pricey improvements after moving into the home. Seventeen percent of sellers have offered a home warranty as an incentive to potential buyers, according to research from the National Association of REALTORS®. The longer a home lingers on the market, the more likely a seller is to offer a warranty, the study finds.

In markets with low inventory, however, a home warranty may actually be a warning sign to potential buyers, Jeffrey P. Cohen, a professor of finance and real estate at the University of Connecticut School of Business, told the Journal.

Find out why.