“What exactly is a home warranty and who pays for it?”
It’s an insurance policy that sellers usually pay for that covers certain things that can go wrong with the systems of the house and (depending on coverage) the appliances, pool, spa, and roof. The policy is for one year after closing and can be renewed. Base policies start at about $300.
Roughly 50% of the time sellers pay for a policy, 25% buyers pay, and 25% of the time there is no home warranty.
If the seller won’t pay for one, should you pay for one yourself?
Like all insurance, if you don’t have a claim that covers you above and beyond the home warranty cost, then the money was essentially wasted. But if you do, you’ll be glad you had one.
So it ultimately comes down to whether you want to spend $300 to $600 to cover you for expenses that typically run in the low $100s to low $1000s.
My approach to insurance is to protect against catastrophic loss and not minor costs. So on the two to three dozen properties I’ve bought, I’ve never gotten a home warranty.