Why include a home warranty with every listing and how does it benefit every party in a real estate transaction?

For starters a home warranty covers the replacement or repair of major systems and appliances in a home such as air conditioning and heating systems, plumbing, electrical, refrigerator, built-in dishwasher and many other home essentials.

SELLERS BENEFITS

For sellers, a home warranty is a marketing tool that agents can use as part of their listing strategy. Payment for the warranty occurs as part of the closing so there are no upfront costs to the seller.

The addition of a home protection plan while their home is on the market can reduce expenses during this time should something break down during the listing period.

BUYER BENEFITS

Typically, properties listed with a home warranty are more appealing to buyers. Peace of mind that even if something breaks down, it is covered adds to their comfort with the purchase.

Once the home closes, the buyers benefits with coverage for a year and more if they choose to renew. This peace of mind can be invaluable during a period where the cost of moving and resettling can provide for unexpected expenses.

AGENTS

Seller’s agents can leverage the warranty to prevent a delay in the closing. If a major system or appliance encounters a mechanical failure during the listing period, and a home warranty is in place, the repair can be made and the closing proceeds as normal.

BUYER’S AGENTS CAN TAKE ADVANTAGE OF A HOME WARRANTY AS WELL IN THESE THREE WAYS:

1. The warranty coverage can help the buyer save money in their first year of ownership. If a covered item needs repaired, they only pay the deductible.
2. It can be used as a risk mitigating tool should a major system or appliance fail after the home closes. The buyer’s agent simply refers his/her client to the home warranty administrator.
3. The most important value a home warranty provides is the opportunity to keep in touch with past client. Most home warranty companies send a communication to the agent when an item has been repaired or replaced. This is the perfect opportunity to reach out, catch-up with clients and ask for a referral.

DEVELOPING AN EFFECTIVE HOME WARRANTY SCRIPT.

Just as with anything in life practice makes perfect. The first step an agent could take to formulate their script is to make a list of the benefits in their own words. From there, an agent should refine the message to a one to two-minute statement that he or she feels comfortable presenting. For example, for a seller considering a warranty:

“I think it is essential to have home warranty during the listing period. I always suggest one to my sellers as it makes your home more appealing to potential buyers! The benefits are like employing a real estate agent such as myself – it offers you protection if a system or appliance fails and payment of the warranty occurs at closing. We can start the listing coverage immediately.”

Once you have a short script, developed and memorized, it is time to consider the individual seller. In any pitch, personalization is key. Does the person have time or expertise if an item needs to be repaired or replaced? For example, has the heating system been overworked with the many winter seasons in Minnesota? These nuggets of knowledge about the seller and the shape of the equipment in their home can take a home warranty pitch from good to great.

For buyer agents, take the time to educate your clients on the benefits and advantages of using a home warranty. Explain how the warranty fits with the home inspection – an inspection is simply one look at the home where a home warranty provides coverage after closing. Here’s an example: “Your new home is one of the most important investments you’ll make. A home inspection may uncover issues that need to be fixed but you’ll never know what comes next. You don’t want anything to break but if it does, a home warranty offers resources to help you fix any breakdowns and assists in keeping home systems and appliances running smoothly.”

The other point a buyer agent should talk to their client about is how a home warranty together with homeowner insurance provides comprehensive coverage. Homeowner insurance only covers the home and personal possessions in case of fire, theft or damage. Adding a home warranty plan provides repair or replacement coverage for mechanical failures of major systems and appliances.

In the end, everyone wins with home warranty coverage. Incorporating a home warranty into a listing presentation or offering it as a risk management tool for your buyers is not only a best practice of Top Producing Agents, but also offers assurance for future peace of mind. Jennifer Gagne

Financial planning isn’t easy and real estate professionals are involved in their clients’ lives often at precisely the time they need to be most careful about their money. Buying a home is a big purchase decision, which requires a well thought out strategy before, during and after the buying process. However, as we all know, sometimes the unexpected can throw even the best laid plans completely off course. There are safeguards against even the most abrupt surprises and it’s up to you to tell buyers about it. What exactly is said protection? A home warranty.

WHY DO HOMEBUYERS NEED FINANCIAL PLANNING ADVICE?

Think about all the expenses the average American worries about on a daily basis. For millennials and first-time homebuyers, the most obvious is student loans. According to Student Loan Hero, recent graduates have an average student loan debt of over $37,000. That’s the sort of loan that takes many years to pay off and it is almost always on graduates’ minds. Then, there’s retirement savings to think about. That’s an issue that faces baby boomers, millennials and everyone inbetween. In fact, there are some who say the U.S. is in the midst of a retirement saving crisis.

The slow crawl of wage increases means that most people can’t look to a salary raise as a solution. The majority of Americans have to work with what they already have or seek assistance from their family. Take all this into consideration, and it may come as no surprise that two-thirds of Americans believe they would have trouble coming up with the money to cover a $1,000 emergency. No matter the income bracket, scraping together this much cash would be difficult for many families, according to a poll conducted by The Associated Press-NORC Center for Public Affairs Research. Here’s a breakdown of how many families in three income categories would have trouble coming up with $1,000 in a pinch:

• Three-quarters of people in households making less than $50,000.
• Two-thirds of individuals in households with salaries between $50,000 and $100,000.
• 38 percent of respondents in households collecting over $100,000 annually.

In fact, for many people, putting together even $400 to cover an emergency is a difficult task. The Federal Reserve’s most recent
“Survey of Household Economics and Decisionmaking” found that to cover a $400 emergency, 46 percent of households would have to either borrow money or sell something.

HOW REAL ESTATE AGENTS CAN HELP CLIENTS PROTECT THEIR FINANCES

Through no fault of their own, considering the entire fiscal responsibilities Americans have these days, chances are your clients could use some financial planning advice. A truly distressing aspect of homeownership is when major home systems and appliances breakdown. An unpredictable failure of a refrigerator or heating system shortly after someone buys a home isn’t exactly out of the question – in fact, in many cases it may be likely.

It’s not uncommon for major appliances to begin failing after two to five years. With older systems this wasn’t the case as they had a longer life span. However, the more high-tech appliances are, the more components and processors there are, each with a chance of breaking down.
People can watch a superhero in a movie at a theater or on TV. However, with money tight and financial emergencies often unpredictable, where do they turn for real-life heroics? Make sure it is you, a real estate agent armed with an exceptional power: the home warranty.

A home warranty is exactly what homeowners need to cover the cost of an unexpected issue, such as a major system or appliance breakdown. With all the financial concerns a new homeowner faces, they shouldn’t have to deal with repairs and replacements. By suggesting home warranties to clients before closing, real estate agents can serve as a financial planning hero. Your former buyers will deeply appreciate the advice, especially if they do end up having to cover the cost of a full or partial system or appliance breakdown. Don’t let your clients go into homeownership alone. Now, they may need a hero more than ever. Have a home warranty provide protection for major systems and appliances. Jennifer Gagne

Below are some basic facts that highlight why a home warranty can be so valuable:

WHAT ARE HOME WARRANTIES?

Just like a warranty for your car, or an expensive piece of electronics, home warranties help buyers and sellers – or current homeowners – insulate themselves from financial risk if major systems or appliances in the house need to be repaired or replaced. An example would be if a system like your hot water heater, or an appliance like your dishwasher were to break down, home warranties help cover many of the repair or replacement costs associated with addressing the issue.

HOW DO THEY WORK?

A homeowner can cover a house by purchasing a warranty at any time, and agents should consider kick starting that conversation before the sales or buying process even begins. Usually, these policies cost a few hundred dollars per year, depending upon the warranty plan that’s chosen, and typically cover any size home (some warranties have an additional charge for homes over 5000 sq. ft.).

As with some insurance policies, there is also a deductible associated with the warranty, which owners pay out of pocket, but these are often quite small compared with the premiums themselves, let alone the cost of repairing or replacing potentially major home systems.

WHAT IF SOMETHING BREAKS?

Suppose a home covered by such a warranty experiences a mechanical failure to the furnace, the warranty may help to cover the costs. The provider will often have partnerships with repair companies that take care of the problem as needed, helping to ensure they get the best possible price. That, in turn, protects homeowners from having to pay potentially more than they otherwise would have if they’d called a technician and paid for repairs out of pocket.

Those partnerships are also important because warranty providers can help keep costs down with in-network providers.

WHAT’S COVERED?

The National Association of Realtors notes that the things individual warranties cover will be different based on the provider and other variables. Most basic plans, however, will take care of most expenses associated with repair or complete replacement for electrical, HVAC and plumbing systems, as well as some appliances. Some will also cover costs associated with repairs for private septic, well pumps, outside sewer lines, etc.., usually for a small additional fee.

WHEN SHOULD THEY BE PURCHASED?

Again, it’s a good idea for someone involved in a real estate sale to get the warranty squared away as soon as possible. Some sellers understand the value of a home warranty enrolled at the time list. Seller coverage gives them peace of mind during their listing and liability protection after the sale. Buyer plans are a valuable financial planning tool to protect buyers from costs associated with mechanical failures of major systems and appliances.

The more you can do to advise your clients of options available to them, the more likely clients are to come out of the process feeling good about the decisions they made. Jennifer Gagne

That kind of fluctuation, as well as the usual effects of harsh winter conditions in general, can really wreak havoc on a house, even if things still seem to be working as normal. Consequently, it’s vital for real estate professionals to talk to their selling clients this spring – and even reach out to old clients as a courtesy. When you can supply some tips for how to make sure various aspects of their homes that are particularly vulnerable to winter weather are well cared for as spring begins, that’s a great way to protect them while simultaneously improving your relationship.

Here are a few areas where you can provide critical advice that helps past and present clients’ homes stay in great shape:

SAFEGUARD THE BASEMENT

As all the snow that built up in recent months is melting, and spring showers start, homeowners must be prepared for the risk of basement flooding. First and foremost, it would be wise to have a sump pump on hand so that, if any water does get in, it can be cleared out quickly and easily. But that’s treating the symptom of the issue and not necessarily the cause, so other tips are important as well.

For instance, perhaps the first thing any homeowner whose house has gutters should do this spring is make sure they’re clear and the places they deposit water run downhill, away from the home. The water pressure that builds up along foundations when water pools there can be far more immense than homeowners realize, so if puddles are forming, they need to be cleared out quickly.

At the same time, agents should advise owners to go through their basements now and look for any cracks or fissures in the foundation where water could potentially seep in during a thaw. The same is true of their exterior foundation. Patching any of them up with sealant – both inside and out – will help avoid basement flooding.

KEEP TABS ON HVAC

If you have a shared central heating and air system, the use it gets throughout the winter could lead to some natural wear and tear that owners should address now, before the summer heat makes the AC a necessity. First and foremost, check, clean and swap out air filters regularly. Experts say this should happen about once a month, and if it doesn’t, those systems are going to run far less efficiently. The same is true when it comes to interior vents, which should be kept clear and cleaned throughout the year to maximize air circulation.

For homes with central air units outside, owners should also make sure the area around that unit is clear of debris and that it didn’t take any damage over the winter. It’s also vital to make sure the components in the unit, like the evaporator or condenser coils, are cleaned at least once or twice a year, and before it gets heavy use in the summer.

OUT BY THE POOL

For homes with pools, it’s important to give them a good once-over as well. That means removing any debris that got past the cover over the winter and checking all elements of the heating, filtration and pump systems to make sure they’re in good working order, well before owners might be considering actually opening the pools. It’s also vital to clear any air from the plumbing for the pool, because this can potentially lead to massive damage to the system overall.

GET IT ALL COVERED

All of these systems can also be covered by a home warranty, which insulates owners – and potential buyers – from the financial risks if one of these systems were to fail or need repairs. That’s true before, during or even after a sale is completed.

The sooner in the real estate sales process a homeowner has the protection of a home warranty, the better off they and the people on the other side of the transaction are likely to be if something were to go wrong. Jennifer Gagne

WHAT IS THE BEST WAY TO TALK TO MY CLIENTS ABOUT HOME WARRANTIES?

The best way to communicate what a home warranty is to your client, is by explaining that most home warranties cover mechanical failures due to normal wear and tear. Coverage typically includes most major systems and major appliances. Some items, conditions and services are not covered such as non-mechanical items, including windows, walls, doors and maintenance service.

Suggestion: This is a good time to explain the difference between a home warranty and homeowner’s insurance. In doing so, your buyer will have a clearer understanding, which translates into higher customer satisfaction.

WHAT DO “BASE PLANS” COVER?

Most home warranty base plans will cover the mechanical failure of the unit itself (repair or replace) and labor (to repair or replace). For example, if a buyer’s furnace has failed and needs to be replaced, most home warranties will cover the cost of the new furnace and the labor to install it. Base plan coverage does vary with each warranty company, so make sure your client investigates the nuances of their applicable plan.

Suggestion: Presenting real-world examples to your buyer helps them have realistic expectations of what a home warranty does and does not cover. Don’t wait until they need the service to explain the nuances. It’s better to be clear up front, to avoid confused or disappointed clients down the road.

CAN MY BUYERS UPGRADE THEIR HOME WARRANTY?

Most home warranty companies offer higher levels of coverage that will help cover out-of-pocket expenses. Upgrades are enhancements to base coverage. There are additional costs, but typically the benefits outweigh the added expense. Some upgrade examples include Premier Upgrade Package, Buyer 7 Star Upgrade, diamond and platinum. Common upgrade coverage options can include coverage of septic systems, private wells and swimming pools.

Suggestion: It’s very important to disclose to your clients what upgrade options are available. You don’t want your client to find out later – or when they file a claim – that they had the option of more complete coverage. Educating your client simply translates into greater customer satisfaction.

DOES A HOME WARRANTY COVER PRE-EXISTING CONDITIONS?

Home warranties are not meant to cover, pre-existing problems. That would be comparable to buying auto insurance after you’ve wrecked the car. However, most national home warranty companies do offer “unknown pre-existing condition” coverage in their base plan for buyers or as an add-on option to their base coverage.

Suggestion: Again, it is in your best interest, and that of your client, to make them aware of these options. The sale might be completed, but if you’re counting on referrals or repeat business, you don’t want all the goodwill you’ve built to be lost over a misunderstanding of their home warranty coverage.

HOW TO DETECT IF THERE IS A PRE-EXISTING CONDITION?

Ignorance is not bliss! The following actions are typically recommended and will help prevent any misunderstandings down the road:

1. A visual inspection of unit or system with no noted problems.
2. Mechanical test is performed, confirming the system can be turned on and off without any noted problems or issues.
3. Documentation may be requested. This could be in the form of a home inspection or a licensed technician checking the system and documenting they found it to be in good, working order prior to the date of enacting the home warranty.

Suggestion: Having a home inspector or qualified technician that has a solid reputation, or who you have used in the past is imperative. Make sure the people working with you are as conscientious as you are!

As I said, these are just a few examples of the most commonly asked questions regarding home warranties. Of course, each sale, client, and house is different, so I invite you to call or email me with any specific questions or concerns you might have. Ultimately, we all want a happy client and home warranties are one way to ensure customer satisfaction and peace of mind. Jennifer Gagne 

In recent months, the big story in the national real estate industry has been a general lack of homes for sale, and the impact this has on sales activity. In many ways, Minnesota has been a microcosm of that trend, and should continue to be for some time to come, according to the Minneapolis Area Association of Realtors. In and around the Twin Cities region, the number of closed sales in September slipped 5.8 percent on an annual basis, thanks in large part to a 4.4 percent decline in inventory.

But because of how much demand there is for homes in the area, the median sales price of such a property exploded, rising 6.1 percent to a value of about $262,000.

ANY END IN SIGHT?

Unfortunately for the market as a whole, the number of new listings seen throughout the month of September continued to slip on an annual basis, falling 2 percent since 2018 beganand continuing an all-too-familiar trend. However, it’s worth noting that the number of newly listed properties actually jumped almost 6 percent year over year, which may indicate that prices have reached the point where current owners are feeling more comfortable about selling.

After all, the average number of days properties spent on the market in September slipped to just 42, down appreciably on an annual basis from the 50 days seen in September 2017, and the average home for sale now sells for about 98.4 percent of its original list price, up slightly year over year. Soon to be released October numbers should give us more information as to how we are trending locally.

IN THE TWIN CITIES

Interestingly, though, list prices seem to be dropping a little bit in Minneapolis, while growing in the suburbs, according to a local real estate team. For instance, Minneapolis has seen a more than 5 percent drop in properties for sale over the last month, but list prices have actually dropped nearly 2.2 percent for residential properties.

The average home for sale in the city has 2.8 bedrooms and 2.1 baths, with a median list price of just under $320,000, and the price per square foot has dropped about 2 percent.

MAKING IT AFFORDABLE

Perhaps the biggest issue for many would-be buyers across Minnesota, then, is they may not see a great opportunity to make a purchase that fits within their budget. While there are many young adults in particular who are looking to buy a home, the options may not be available for them in locations they desire, according to the Southwest Journal. Across the Twin Cities, about 100,000 households spend more than half their money on rent, and some advocates say city officials aren’t doing enough to ensure affordable home construction.

While organizations exist to help people who might otherwise have difficulty affording homeownership achieve that goal, it’s understandable that they don’t have a significant enough reach to help everyone who may want to buy, the report said.

It’s important to remember that while buyers might be discouraged by some conditions in the market, and particularly the lack of inventory, agents can encourage them by pointing out that December and January are two of the best months in which to buy a home because competition from other buyers thins out and sellers become more motivated. This may also provide agents with the opportunity to introduce a home warranty into a transaction to provide more financial protection for buyers and sellers alike.

Because of how hot the Minnesota housing market has been, thanks to massive demand from a generation of adults finally seeing homeownership as a viable option for themselves, it’s now quite common for a current owner to go from hosting an open house to closing the sale within just two or three weeks, according to the Twin Cities Pioneer Press. Experts say that happens when markets heat up as the Twin Cities have, because buyers know they need to go above and beyond to stand out from a crowd of similarly qualified bidders.

Consequently, real estate agents are now advising their clients to turn in mountains of paperwork that wouldn’t have been required even a few years ago, and for many millennials that’s just as well.

Consequently, real estate agents are now advising their clients to turn in mountains of paperwork that wouldn’t have been required even a few years ago, and for many millennials that’s just as well. Millennials have been given plenty of reason to be wary of taking on debts of just about any size – and the financial sector in general – since the Great Recession limited their financial options in ways that haven’t affected a generation so singularly since the 1930s.

A LITTLE GUIDANCE GOES A LONG WAY

Because so many millennials had to start their lives as financially independent adults with such adverse circumstances – mountains of student loan debt, a tough job market, lower incomes even for those with jobs, etc. – might not have felt truly ready to buy a home. As a consequence, agents are needing to be more proactive about providing guidance regarding what’s required of buyers, especially in the current market.

In the Twin Cities in particular, things seem to be a little more difficult on millennial buyers than they might expect, according to recent data from Realtor.com. In the second quarter, the market was listed as the fourth-toughest market for millennials to buy in, largely because there’s a more significant shortage of starter homes in the area versus other similarly sized markets.

A STARTER HOME PROBLEM

Homes priced at less than $250,000 – which are most often sought by young people because of the lower down-payment requirements – are hard to come by, and anecdotally, these shoppers face tough competition not only from each other, but also from investors who are ready to make cash offers. While only a little more than 1 in 7 people in the region are millennials, this population makes up more than 1 in 4 page views on Realtor. com from the region.

Moreover, local observers say that builders aren’t really doing as much as they perhaps could to meet that demand for starter homes in particular, according to Minnesota Public Radio. Many developers are, instead, focusing on putting up homes that price out north of $300,000 – in fact, local data suggests the median home price of a home built in the last year came to about $450,000, which makes it hard to meet millennials’ needs.

Of course, buying a home is always going to be a big investment and a significant journey, especially for a generation that has little to no experience. When young people are looking to buy a home anywhere in Minnesota, it’s typically a good idea to consider the benefits of a home warranty. These products can help both buyers and sellers protect themselves financially during and even after the sale is completed, by helping to cover costs when repairs or replacements are needed for things like home heating or cooling systems and major appliances.

With that in mind, it’s important to talk to your clients about the benefits home warranties can provide, among the many other aspects of real estate sales. It’s also important to remember that an upgraded home warranty is the best way for a buyer or seller to protect themselves from out of pocket expenses around mechanical systems in a home.

While the low inventory seen in most parts of Minnesota should continue to push home prices higher, the fact that rates are starting to rise more sharply – and are expected to continue doing so for some time to come thanks to the improving economy – should lead to some cooling here.

SOME CHALLENGES STILL LINGER

It’s also worth noting that the tight inventory isn’t likely to be alleviated any time soon. Current homeowners may be hesitant to sell because of how much their mortgage rates would rise if they sought another home loan, and that might be a particular concern for those with lower-priced properties which – as with most of the country – are all too rare among listings these days. In addition, while builders are doing all they can to put up affordable housing throughout the state, they aren’t likely to come close to meeting existing demand; moreover, many homes in and around the Twin Cities may not be affordable in comparison with statewide averages, making the idea of moving there a potential hurdle for hopeful shoppers.

However, it’s worth noting that home prices continue to rise at rates well above historical averages – and in some parts of the state, it could be as much as double the all-time average, which tends to hover a little above 3 percent.

Along similar lines, despite rising mortgage rates which could turn some buyers off from getting into the market, it’s important to stress that all-time average mortgage rates are still close to double the current level, meaning that buyers getting into the market any time soon are likely to lock in rates that are historically affordable.

A CLOSER LOOK

It should come as little surprise to those in the industry that the Twin Cities are home to the busiest housing markets in Minnesota, and a closer look at the trends there may highlight a number of things for agents to talk with their buying and selling clients about going forward. As of mid-July, the median sales price in Minneapolis was about $265,000, up about $23,500 from where they were at this time last year, according to the latest data from Trulia. Likewise, rents are well above the levels seen a year ago (an increase of $100 per month).

Taken together, this means now might be a good time to try buying. The median resident of the city is 34 years old, and currently 43 percent of residents are not yet homeowners, the report said. The median resident also earns more than $51,000 annually, and 80 percent of them commute to work by car, versus just 13 percent by public transit.

From late March to late June, there were only a little more than 1,100 home sales in Minneapolis.

ANOTHER ISSUE

Meanwhile, city data shows that more than 1,000 residential properties in Minneapolis and St. Paul alone currently sit empty – despite the heavy demand among would-be buyers seen within the Twin Cities and beyond, according to the Minneapolis Star-Tribune. Moreover, the city of Minneapolis put a new penalty into place more than a decade ago for properties that sit vacant, charging owners close $7,000 per year, but it has little impact on owners’ desires to keep those houses empty.

The inventory of those vacant properties comes as there are only about 9,200 properties up for sale in the Twin Cities metro area, a number that had fallen sharply from 12,000 a year earlier. Despite efforts to penalize ownership of intentionally vacant properties – of which relatively few are in foreclosure – the regulatory efforts don’t really seem to be getting much accomplished apart from raising funds.

Keeping all these issues in mind, real estate professionals can encourage a strong positive attitude among would-be buyers and sellers. Their efforts could really pay off even as activity slows in the housing market overall.

With that being said, as activity starts to cools down, it’s a great time to think about setting your listing inventory apart by offering a home warranty to prospective buyers.

That could be the case in Minnesota this spring and into the summer, because the state – like many others – is facing something of an inventory shortage. Fortunately, there are a number of ways even inexperienced home shoppers may be able to gain an edge on the competition in what’s sure to be a heated market – whether they’re looking to buy in and around the Twin Cities or the Arrowhead region, according to the Bemidji Pioneer. It is therefore incumbent upon agents to impart some of the wisdom they’ve cultivated over their years of experience.

WHERE TO BEGIN?

Agents should stress that the first thing any hopeful homeowner should do, before they even start looking at houses, is get pre-approval on a mortgage. Doing so will help potential buyers get a good idea of not only what they will be able to afford, based on what kind of credit lenders will extend to them, but also what their mortgage rates are likely to be. As part of preapproval, it’s important that would-be buyers be able to bring a strong credit score and sizable down payment to the table, because this will only further improve their long-term affordability.

Real estate pros should also advise that “a large down payment” does not mean buyers will have to put down 20 percent, but the bigger the dollar figure, the more likely they will be to get approved and obtain a favorable deal. It’s also vital, however, to make sure first-timers know to shop around for the best possible deal on a mortgage. Roseann Lund, senior vice president of mortgage lending at a financial institution in Bemidji, told the newspaper that most banks understand consumers can’t always save up the tens of thousands of dollars necessary to make a 20 percent down payment, but every little bit above and beyond a payment in the low single digits can really pay off down the line.

THE LAY OF THE LAND

One thing agents will often see from first-time homebuyers is that they get their hearts set on a specific home, one that might be out of their price range or likely to generate a lot of interest from other shoppers. This is what some agents refer to as “buying on emotion,” and can potentially sidetrack an otherwise strong chance of getting a good deal, according to Pro Team Minnesota. Here, too, agents can impart some serious advice about what actually constitutes great terms and which homes are more likely than others to garner bidding wars.

This can be particularly important for agents who can go through a home and spot potential trouble areas that inexperienced buyers might otherwise miss or even justify to themselves. For instance, if homes have older appliances or systems, haven’t updated insulation in a while, need a new roof, or, have other troubling characteristics, real estate pros can advise their clients to dial back expectations or even the quality of their bids. Partnering with a reputable home inspector to better highlight these issues can also go a long way toward helping clients keep a clear head about what to expect.

KNOW WHAT TO LOOK FOR

For any first-timer, the prospect of being able to buy a home can be extremely exciting, but agents have to set expectations based on current market conditions. Right now, Minnesota is a lot like the rest of the country, experiencing serious declines in the number of new listings and skyrocketing property values, according to the latest data from the Minneapolis Area Association of Realtors.

Indeed, in the 16 counties surrounding the Twin Cities region, new listings were down nearly 8 percent year-to-date on an annual basis through the end of February, and prices were up 11.5 percent. Homes are now spending less than 70 days on the market, and the number of sales being completed has dipped 4.5 percent.

Generally speaking, when agents can tap their wealth of business knowledge and experience, they will be able to provide a trusted voice in helping new shoppers navigate the market.

The good news for those looking to reach buyers in the months ahead is that, according to new data from Lending Tree, there’s likely to be no shortage of shoppers who plan to get into the market this spring. The Twin Cities in particular are likely to be one of the hottest markets for homebuying competition in the country this spring, ranking 16th nationally.

EXAMINING THE COMPETITION

The Twin Cities’ metro area is home to some 3.55 million people, and those planning to get into the market largely seem set on doing things the right way, in line with what any experienced agent would recommend. More than half of would-be buyers have credit scores that are at least prime, and nearly three in five say they will get preapproval on a mortgage before they hit the market in search of a home. Moreover, the average down payment those shoppers are prepared to put down is significant, at 14 percent.

To that end, agents will be wise to make sure their clients know the importance of improving credit scores and down payment size, so that even as competition heats up – especially among first-time buyers – they will be able to find a deal on a home they want.

FINDING STARTER HOMES

As with many major housing markets that are expected to see big increases in real estate sales activity, the Twin Cities and surrounding region are experiencing a significant lack of lower-priced starter homes that would normally be favored by younger buyers, according to the Minnesota Post. The problems mostly stem from owners not selling – despite plenty of year-over-year home price increases since the end of the recession – and construction firms simply not keeping up with demand.

In addition, the number of would-be buyers with sizable annual salaries getting into the market, who might have previously focused on larger, more expensive homes, are likewise more interested in buying lower-cost homes. They can therefore, afford to make bigger bids on smaller homes, which takes away options for those who want to buy with more modest budgets.

David Arbit, director of research and economics at the Minneapolis Area Association of REALTORS, told the site that most people on the lookout for a first home, to make sure their mortgage payments are in the same range as rent for a two-bedroom apartment in the region. That desire puts most people in the area of being able to spend between $1,200 and $1,600 on a mortgage payment each month. But, when more affluent buyers can swoop in and make larger offers, the supply of homes in that price range becomes more limited.

DIGGING INTO THE NUMBERS

At the end of 2017, the median sales price in and around the Twin Cities had risen sharply on an annual basis, according to the MAAR. Buyers in the area paid a median price of $248,500 in December 2017, up 10 percent from the $226,000 seen at the end of 2016, and sellers were recouping 97 percent of their properties’ list prices, up from 95.9 percent a year earlier.

Meanwhile, the inventory of homes for sale in the region had plummeted from nearly 9,500 to more than 6,800. That change led to a sharp decline in the supply of homes for sale – to just 1.3 months from the previous 1.9 months. New listings were down nearly 5 percent over that period.

With competition heating up, properties put on the market are spending a lot less time up for sale, falling to an average of just 61 days on the market in December 2017. That’s down from 72 at the same time in 2016.

With so much at stake in a home sale these days, it’s vital for agents to ensure their clients are financially protected throughout a sale. When agents make sure a home warranty is included as early into the process as possible, all involved can be insulated against unexpected costs and potentially save large amounts of money. Because of current market conditions, many sellers may feel they don’t have to include a warranty, but it can actually be an attractive selling point and encourage more bidding because of the additional security it can provide if something were to go wrong with an appliance or system in their homes.