By Tim Ornell
Buying or selling a home on a northern Minnesota lake involves more decisions than most people expect, and the home warranty question comes up in almost every transaction I handle. It sounds straightforward — you either get one or you don't — but the answer depends on where you are in the deal, what type of property you're working with, and what the market is doing. Here's what I tell my clients around White Bear Lake, Bald Eagle Lake, and the northern suburbs before they sign anything.
Key Takeaways
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A home warranty is a service contract that covers repair or replacement of major home systems and appliances due to normal wear and tear — it is not the same as homeowner's insurance
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Either the buyer or the seller can pay for a home warranty, and it's negotiable as part of closing
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In a buyer's market, sellers often offer warranties to make a listing more competitive; in a seller's market, buyers more frequently purchase their own coverage
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Home warranties are not required in Minnesota, but they can protect both sides from unexpected costs during and after the transaction
What a Home Warranty Actually Covers
A home warranty is a service contract, not an insurance policy. Homeowner's insurance protects against sudden events like fire, theft, or storm damage. A home warranty covers mechanical failures — the slow breakdown of systems and appliances due to everyday use.
Typical systems and appliances covered under standard home warranty plans:
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HVAC systems (heating and cooling)
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Plumbing and electrical systems
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Water heater
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Built-in kitchen appliances (refrigerator, dishwasher, oven)
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Washer and dryer
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Garage door openers
Add-on coverage for things like pool equipment, well pumps, or roof leak protection is available through most providers at an additional cost. When a covered item breaks down, the homeowner pays a service fee — typically between $65 and $125 per visit — and the warranty company dispatches a licensed technician to handle the repair or replacement.
Who Pays for a Home Warranty?
This is the question I get most often, and the answer is: it depends on the deal.
The four most common scenarios in real estate transactions:
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Seller pays at closing. Sellers frequently offer a warranty as a listing incentive, particularly in a buyer's market where inventory is high. A study by American Home Shield found that pairing a listing with a warranty can increase the final sale price by close to 1%, which often exceeds the cost of the policy.
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Buyer purchases their own. In a competitive seller's market, buyers sometimes purchase their own coverage after closing — often because they want more comprehensive protection or prefer a specific provider.
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The agent provides it. Real estate agents sometimes purchase a warranty for their buyer clients as a closing gift. It's one of the most common incentives agents offer.
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Negotiated in the contract. Coverage terms can be written into the purchase agreement, specifying who pays and what plan is selected before anyone signs.
Seller Coverage vs. Buyer Coverage
One detail many clients don't realize: coverage can begin before closing, not just after.
How seller coverage works:
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Purchased at listing time, with no payment due until closing
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Protects the seller from unexpected repair costs while the home is on the market
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Transfers to the buyer at closing, typically converting to a full one-year buyer policy
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Limits covered repairs during the listing period to a set dollar cap, depending on the provider
This is especially useful in a market like White Bear Lake, where a home on the market might sit for several weeks during the evaluation period. If the furnace fails or the dishwasher breaks down after an offer is accepted, the last thing either party wants is a blown deal over a repair cost that could have been handled by a warranty claim.
What Home Warranties Don't Cover
Setting accurate expectations matters. A home warranty will not cover:
Common exclusions to review carefully before purchasing:
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Pre-existing conditions identified in the home inspection
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Cosmetic issues, damage from pests or improper maintenance
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Structural components (foundation, walls, roof framing)
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Items that were not properly installed or are out of code
This is one reason I always recommend my clients review the full sample contract from any home warranty provider before committing. The coverage limits, service fee amounts, and exclusion lists vary significantly between plans and companies.
Do You Actually Need One?
Not every transaction calls for a home warranty, and not every client benefits from one in the same way. For buyers purchasing a newly built or recently renovated home with modern, under-warranty systems, the added coverage may duplicate what builder warranties already provide. For buyers purchasing an older property — particularly the established lakefront homes and estate-scale builds common in the White Bear Lake and Dellwood corridor — a home warranty provides a meaningful layer of protection during the first year of ownership, when unfamiliar systems are most likely to reveal issues.
For sellers, the calculus is simpler. If you want your listing to stand out, a seller-paid warranty signals confidence in the property's condition. It reduces the likelihood of post-inspection repair negotiations derailing the deal. And if something breaks in the weeks between accepting an offer and reaching the closing table, you won't be writing a check out of pocket.
For sellers, the calculus is simpler. If you want your listing to stand out, a seller-paid warranty signals confidence in the property's condition. It reduces the likelihood of post-inspection repair negotiations derailing the deal. And if something breaks in the weeks between accepting an offer and reaching the closing table, you won't be writing a check out of pocket.
Frequently Asked Questions
Is a home warranty required to buy or sell a home in Minnesota?
No. Home warranties are not required in Minnesota. They are optional service contracts that either party can choose to include as part of a real estate transaction, or purchase independently of any sale.
How much does a home warranty typically cost?
Annual premiums generally range from around $350 to over $1,000, depending on the plan's scope and the provider. Service fees per covered repair call typically run between $65 and $125. In most cases, the total cost is a fraction of what a single major system replacement would run.
Can a buyer purchase a home warranty after closing?
Yes. Most warranty providers allow homeowners to purchase a policy at any time, not just during a real estate transaction. However, buying at closing is often the most seamless path, since the cost can be rolled into the transaction.
Work With a White Bear Lake Real Estate Advisor Who Knows the Details
Tim Ornell has guided buyers and sellers through the waterfront and upper-tier home markets across the northern Twin Cities suburbs for over a decade. Every transaction involves decisions that go beyond price — financing structure, inspection strategy, and yes, whether a home warranty makes sense for your specific situation.
Ornell Group works with clients who want clear, direct guidance at every step. Reach out to me to learn more about how I guide buyers and sellers through every step of a White Bear Lake transaction.
Ornell Group works with clients who want clear, direct guidance at every step. Reach out to me to learn more about how I guide buyers and sellers through every step of a White Bear Lake transaction.
