What's a Warranty Worth? the Impact of Home Owner Warranties on Property Sales‪.‬

abstract Home owner warranties (HOWs) are insurance policies that supplement regular homeowner's insurance. HOWs cover major systems (e.g., HVAC, plumbing, etc.) in homes and are usually purchased during the marketing of a property. This study examines the impact of HOWs on a property's price and marketing time; the results suggest that the residential real estate market does not reflect premiums in price or marketing time. It seems likely that mechanisms in the real estate market, including the uniform residential appraisal process, serve the role traditionally ascribed to HOWs and negate the effect of HOWs on price. In addition, the results indicate an adjustment for the presence of an HOW in the residential appraisal process is not warranted.