The truth about relocating: Marketing to the mature homeowner part 4

Amara Rose September 27, 2011 6

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Senior Moving“When I retire I plan on moving to a smaller home.”
“When I retire I’ll relocate to be closer to the kids.”

Although people may make similar statements in middle age, the reality is quite different. One study found the general move rate for seniors aged 55-64 to be just 7.4 percent per year. Clearly, while the idea of relocating to a senior-centric area (such as Florida) or to be nearer adult children might appeal, the pull of the home where they’ve raised those children, built a life, entertained their friends, and created a lifetime of memories is often stronger.

This is a boon for reverse mortgage professionals, who can help people avoid having to sell their memories (i.e., their home) in order to generate sufficient cash flow for their golden years.

There are emotional and logistical issues to moving and/or downsizing, as well as financial considerations. For some people, moving makes a lot of sense: the house is just too big, or their health isn’t up to caring for it. For the vast majority, however, aging in place (see our series on mature homeowners) is the keynote for savvy seniors, thus making them ideal reverse mortgage leads.

To better understand your target market, consider that leaving their long-term homestead means:

  • Emotional upheaval. Their house holds a lifetime of memories, as does the neighborhood. They’ve built relationships with everyone from the grocer to the librarian to their auto mechanic; it can be as difficult to let go of these peripheral connections as it is to say goodbye to cherished friends.
  • Relinquishing friendships. It’s harder to meet and form new friendships as we age, partly because we don’t have the built-in people access we did when we were younger (through school, work, civic and community activities, health clubs, etc). Some seniors may have decades-long friendships in the town where they’ve lived all their adult lives; losing these friends at this life stage could precipitate depression.
  • Logistics. Not only does relocation — especially to a smaller dwelling — necessitate selling, storing, or giving away precious possessions (a huge task in itself), there’s also the matter of adjusting to a whole new area, and choosing a new doctor, dentist, hairdresser, grocery store, etc. Many people can find these tasks daunting, depending on their age, mobility and overall health.

Thus, in marketing reverse mortgages to the mature homeowner, it’s wise to recognize and acknowledge their choice to stay put, for all these reasons and more. Your reverse mortgage prospects will feel validated in their decision — especially knowing that the equity in their beloved home can help support them as they grow older.

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6 Comments »

  1. The_Cynic September 27, 2011 at 1:18 pm - Reply

    With the growing numbers of those in late middle age and early senior years (not just choosing but) needing to work into later life, optional relocation should become less and less prevalent. While some seniors will always be moving optional moves will be diminishing over time reducing the HECM for purchase opportunity on a percentage basis when looking at the senior population as a whole.

    Those, who are using the statistical information on move trends among seniors to develop a HECM for purchase strategy, need to temper those plans by the changes taking place in the senior community. For the Baby Boom generation as was once said to it by the Oldsmobile marketing campaigns: “This isn’t your father’s retirement outlook.”

    Many HECM originators are looking to HECMs for Purchase as a significant portion of a viable business plan. While that may work well for originators in some sunshine states, it will not work everywhere. The old retirement concepts of relocation and freedom to move in retirement are due for radical readjustment.

    • Shannon Hicks September 28, 2011 at 3:39 pm - Reply

      You are correct. The dramatic demographic shift we find ourselves in will indeed reduce elective moves by retirees and thus fewer HECM Purchases. That coupled with the statistics of seniors who actually move shows us the common object “I plan on moving” is often a moot point and often a defense against further exploring a reverse mortgage.

  2. James E. Veale, CPA, MBT September 27, 2011 at 1:26 pm - Reply

    It is very disappointing to read the concept of income being attributed to loan proceeds. HECMs do not generate income, they very effectively provide cash. Even with a HECM, many seniors need to find more sources of income. A HECM is not a substitute for income but it certainly provides needed cash.

    • Shannon Hicks September 28, 2011 at 3:37 pm - Reply

      Jim,

      Good point. We’ve replaced the word “income” with cash flow which would be more accurate. Income would increase an individuals net worth while loan proceeds slowly use available net worth and assets such as a home.

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