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Residential Service Contract Cost

Updated: August 11, 2023
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What does a residential service contract cost? If you are a homeowner who wants to protect your home’s appliances and systems, you may ask this question. Let’s explore this question and review some general information about residential service contracts and why you may need one.

How Much Does a Residential Service Contract Cost?

A residential service contract, sometimes called a home warranty, or a home service contract, works like an insurance policy and provides financial protection for your home’s appliances and systems when they break due to normal wear and tear.

A homeowner can usually purchase a residential service contract anytime during homeownership.

For those selling a house, including a residential service contract adds value and ensures that if any systems or appliances are included in the sales contract breakdown, you can have them repaired without breaching the purchase and sale contract and putting the deal in jeopardy.

The cost of a residential service contract will depend on the level of coverage, your home location, how payments are made and distributed, the length of the contract, and the service fee. Two costs most often associated with residential service contracts are premiums and service call fees.

  • Premiums. The amount paid every month to keep the contract active. The premium cost will vary based on the amount of coverage you choose.
  • Service call fees. Every time you claim and require a covered item to be repaired under the residential service contract, you incur a service fee for the technician to come to your home and fix it. The average service fee is between $75-$125. However, this may change based on the company providing warranties and location.

Before signing a residential service contract, you should have a real estate lawyer review it to ensure that it includes everything you need for your home.

Based on ContractsCounsel’s marketplace data, the average cost of a project involving a residential service contract is $574.07.

What’s Included in a Residential Service Contract

Residential service contracts cover appliances in your home's major systems and have the option for add-ons. Many contracts require homeowners to pay extra for the add-ons. Commonly covered items include:

  • Refrigerator
  • Washer and dryer
  • Dishwasher
  • Garbage disposal
  • Oven
  • Air conditioning
  • Heating system
  • Electrical system
  • Plumbing
  • Ductwork
  • Water heater

Add-ons commonly include:

  • Pool
  • Roof leaks
  • Septic tank
  • Alarm system

While the coverage seems very comprehensive, it is important to understand what appliances, systems, and parts of the house will not be covered by a residential service contract.

A new residential service contract will not cover any pre-existing or known issues with the home or the systems. In addition, the following common items and issues will also not be covered:

  • Design flaws
  • Foundations
  • Intentional damage
  • Commercial properties or appliances
  • Things that break due to manufacturer defect
  • Structural issues

While a residential service contract doesn’t cover these issues and items, your homeowner's insurance covers some issues like foundations or structural issues.

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Residential Service Contract Review

Residential service contracts are provided by the company selling the home warranty. These contracts can be complicated documents. It may be difficult to understand what is covered, what is not, and how premiums and service fees work.

Like any contract, if you are unsure about the terms and your obligations, it is recommended to hire an attorney to assist you.

A contract lawyer can review the terms of your residential service contract and make sure that it is fair, provides sufficient protection, understands the terms of the agreement, and is legally enforceable.

Your lawyer will be able to explain the contract to you so you are fully aware of all your obligations.

Residential Service Contract Review Cost

If you choose to hire an attorney to review your residential service contract, it will come with legal fees. A lawyer will charge for their time reviewing the contract, providing advice, meetings, and any work done by their support staff, like paralegals.

ContractsCounsel’s marketplace data shows that the average cost to review a residential service contract is $574.07 across all states.

How Do Lawyers Charge for a Residential Service Contract?

Contract lawyers can charge clients for services in several ways. The two most popular fee agreements are hourly rates and flat fee rates.

Hourly Rates for Residential Service Contracts

Hourly rate fee structures are common for contract lawyers to bill clients. Under this fee agreement, the lawyer will keep track of their time working on the project and then bill the client for the total number of hours at a predetermined hourly rate.

This fee structure ensures that the lawyer is paid for their time even if the case takes longer than expected.

Clients should maintain contact with their lawyers and ask for monthly billing statements. This avoids a surprisingly large bill at the end of legal services.

ContractsCounsel’s marketplace data shows that the average hourly rate for a contract lawyer ranges from $200 - $350 per hour.

Flat Fee Rates for Residential Service Contracts

When a lawyer is hired for a specific project, like reviewing a residential service contract, they may forego hourly rates and charge a simple flat fee.

Under this fee structure, the lawyer will provide their client with a flat fee quote for all legal services involved in the task or project. The client is typically required to pay this fee upfront and usually will not incur any additional fees.

Clients tend to like this billing structure because they know the amount legal services will cost before agreeing to hire a lawyer. However, clients should always understand what the flat rate fee covers. Additional services like negotiations or extra meetings with the attorney could cost more.

ContractsCounsel’s marketplace data shows that the average flat fee for reviewing a residential service contract is $574.07.

Get Help with a Residential Service Contract

Do you need help with a residential service contract project? If so, post a project in ContractsCounsel’s marketplace to receive flat fee bids from contract lawyers to handle your project. All lawyers on the ContractsCounsel’s platform are vetted by our team to make sure you are provided with top tier service.

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