Members of the Baby Boomer generation are turning 65 at a rate of approximately 10,000 people per day. This trend is expected to continue for the next 15 years, and as more and more retire, they are looking at making a move.
While some are downsizing and shifting toward multifamily residences, others are still looking to trade up to their dream homes. The common goal for most is to find a home where they will also be able to age in place. For Real Estate Agents, this creates a unique opportunity to help clients—and former clients—transition into the next phase of their lives and potentially earn commissions on two transactions, especially when a Reverse Purchase strategy is involved.
The Reverse Purchase
Created in 2008, the Reverse Purchase enables homeowners who are at least 62 years old to buy a new principal residence without incurring a monthly mortgage payment, though they will still need to pay taxes, insurance, and monthly HOA if applicable. Since it requires less upfront investment than an all-cash purchase and no monthly mortgage payments, a Reverse Purchase can help preserve your client’s retirement savings while improving their monthly cash flow. The lender is repaid from the eventual sale of the property, not from income, so your client may be able to afford a home that would otherwise be beyond their financial reach.
While a client may opt to sell their current home and buy a home better suited to aging in place, they also have the opportunity to keep their original home. Assuming they have sufficient cash balances available for a down payment, they can choose to rent out their old home and buy a new home with a Reverse Purchase.
Low Barrier to Financing
Qualifying for a Reverse Purchase is rather straightforward since the lender isn’t looking to your client’s income or credit standing for repayment. There are no income or FICO qualifications, nor a debt-to-income ratio that needs to be met. A previous bankruptcy, foreclosure, or the presence of medical bills is also not a barrier to approval.
Transitioning Clients to a Better Retirement
Whether your client is looking to relocate to a different climate, wants to be closer to family, or would like to try a new lifestyle, Reverse Purchase enables you to help them achieve the type of retirement housing they aspire to while building your business in a sustainable way.
The U.S. Census Bureau estimates the number of Americans 65 and older will reach 73 million by 2030. Given this trend, finding housing for older clients that is more suitable to their retirement needs—and facilitating these dual transactions through Reverse Purchase—can produce commission opportunities for years to come.