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Home Warranty Seller Paid Calculator
A seller-paid home warranty is cheap insurance against post-close disputes.
Net seller benefit
-$195
Seller cost
$650
Expected avoided dispute cost
$455
How the math works
Seller cost = premium × share. Expected avoided = freq × avg × deflection.
$650 × 100% = $650 cost. 10% × $6,500 × 70% = $455 avoided. Net benefit −$195 (break-even borderline).
How to Use
- Enter warranty premium.
- Enter seller share %.
- Enter avg post-close claim frequency %.
- Enter avg claim cost.
- Enter legal/dispute cost.
- Read net seller economics.
Frequently Asked Questions
What does a home warranty cover?
Plan-dependent: appliances (stove, dishwasher, washer, dryer), HVAC, plumbing, electrical, water heater. Typical 1-year plan. Does NOT cover: roof, windows, exterior, foundation, pre-existing conditions. Optional upgrade covers pool, spa, septic, well. Major providers: American Home Shield, Choice, 2-10 Home Buyers, Select. Typical cost: $400-700 basic, $600-1,000 with upgrades.
Buyer leverage?
Buyers request seller-paid home warranty as contingency in 40-60% of transactions. Strongest during buyer's markets. Used as settlement tool when buyer uncovers minor inspection issues ($3-8k repairs) — seller offers warranty instead of repair credit. Warranty covers mechanical issues, which are the high-probability post-close disputes.
Claim economics?
Base claim rate: 25-40% of first-year homeowners file at least one claim. Approval rate: 60-80% (some exclusions common). Average payout: $600-1,500 per approved claim. Seller's liability for post-close disputes without warranty: attorney fees $2-5k just to defend; actual damages often $5-25k. Warranty shifts dispute from seller to warranty company.
ROI to seller?
Direct dispute avoidance: 5-15% of transactions have post-close dispute in first 6 months. Warranty prevents 60-80% of these. Expected savings: $1-3k per transaction in avoided defense + repair cost. Warranty premium: $500-700. Net ROI positive for sellers. Also improves buyer satisfaction → positive reviews → referrals.
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