The Importance of Home Equity in Retirement Planning | Simplifying The Market

The Importance of Home Equity in Retirement Planning

We often discuss the difference in family wealth between homeowner households and renter households. Much of that difference is the result of the equity buildup that homeowners experience over the time that they own their home. In a report recently released by the nonpartisan Employee Benefit Research Institute (EBRI), they reveal how valuable equity can be in retirement planning. (more…)

5 Tech Questions that Seniors Should Ask When Interviewing a Real Estate Agent

Senior-Couple-SunSet

We are pleased to have Nikki Buckelew back as our guest blogger for today’s post. Nikki has extensive experience working with seniors and is the Founder & CEO of the Senior Real Estate Institute. Enjoy! 

If you have not bought or sold a home in a few years (or maybe decades) it is likely that there are more than a few new trends in real estate that you will encounter as you begin to interview real estate agents.

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Baby Boomers: Home Is Where The Heart Is

Baby Boomers Find Freedom in Housing | Simplifying The Market

Within the next five years, Baby Boomers are projected to have the largest household growth of any other generation during that same time period, according to the Joint Center for Housing Studies of Harvard. Let’s take a look at why…

In Merrill Lynch’s latest study, “Home in Retirement: More Freedom, New Choices” they surveyed nearly 6,000 adults ages 21 and older about housing.

Crossing the “Freedom Threshold”

Throughout our lives, there are often responsibilities that dictate where we live. Whether being in the best school district for our children, being close to our jobs, or some other factor is preventing a move, the study found that there is a substantial shift that takes place at age 61.

The study refers to this change as “Crossing the Freedom Threshold”. When where you live is no longer determined by responsibilities, but rather a freedom to live wherever you like. (see the chart below)

Crossing The Freedom Threshold | Simplifying The Market

As one participant in the study stated:

“In retirement, you have the chance to live anywhere you want. Or you can just stay where you are. There hasn’t been another time in life when we’ve had that kind of freedom.” 

On the Move

According to the study, “an estimated 4.2 million retirees moved into a new home last year alone.” Two-thirds of retirees say that they are likely to move at least once during retirement.

The top reason to relocate cited was “wanting to be closer to family” at 29%, a close second was “wanting to reduce home expenses”. See the chart below for the top 6 reasons broken down.

Reasons For Moving In Retirement | Simplifying The Market

Not Every Baby Boomer Downsizes

There is a common misconception that as retirees find themselves with less children at home that they will instantly desire a smaller home to maintain. While that may be the case for half of those surveyed, the study found that three in ten decide to actually upsize to a larger home.

Some choose to buy a home in a desirable destination with extra space for large family vacations, reunions, extended visits, or to allow other family members to move in with them.

“Retirees often find their homes become places for family to come together and reconnect, particularly during holidays or summer vacations.”

Bottom Line

If your housing needs have changed or are about to change, meet with a local real estate professional in your area who can help with deciding your next step.

When Character is More Valuable than Competence

When Character is More Valuable than Competence | Keeping Current Matters

Today we are pleased to have Nikki Buckelew back as our guest blogger. Nikki is considered a leading authority on seniors real estate and housing. Enjoy!

It was her 80th birthday and as Sue’s family gathered around in celebration, she announced a major decision. After years of toying with the idea, she had come to the conclusion that now – yes, now – was the proper time for her to move into a continuing care retirement community (CCRC).

Although they were a bit surprised, Sue’s two adult children (both seniors themselves) nodded to each other and expressed relief that their mother would have access to the support and care she needed. Both admitted to a bit of worry about her living alone since their dad died, especially as they both traveled extensively and were not available to see her or care for her on a regular basis.

But, of course, they all realized that such a move would require a massive commitment of time and energy, with the first necessary step being to find a good real estate agent to help sell the longtime family home.

Sue mentioned that she was acquainted with an agent she had met at church and who regularly sent her mailings. The agent seemed quite nice and professional, had won numerous awards, was active in the community, and owned a variety of impressive-looking credentials. You know, she had a whole bunch of letters and acronyms at the end of her name.

Sue and her children arranged for a meeting with the agent, and while she was clearly competent and well-educated in her field, Sue just couldn’t get past a nagging feeling that something was amiss. The agent was nice enough, but throughout Sue’s entire life, she had tended to gravitate toward doing business only with those to whom she felt some sort of connection. Perhaps it was something she had learned from her father, a man who valued relationships in business dealings as much or more than mere competence. Not only did she want help, but she also wanted to feel a special sort of bond and trust.

The practice had served her well throughout life and now – with such an important transaction – she wasn’t about to change her approach.

Sue scanned the yellow pages, spoke on the phone with a few agents, and even met with another over coffee, but still she couldn’t find the sensation of trust and comfort she desired. She even did a couple of quick internet searches leaving her feeling confused and frustrated. It occurred to Sue’s daughter that perhaps the CCRC that was to be Sue’s new home would be able to provide a recommendation for a good agent. Indeed, they did, and that’s when she met Joe.

Joe was different

He arrived at her home and immediately the two hit it off. Sue hired Joe to list and sell her house and as he began to take his leave, Sue touched him gently on the arm and said “Thank you, Joe. You are different than other agents I’ve met with,” she smiled. “I don’t know exactly what it is, but I feel I can truly trust you to help me make this move.”

Sue’s home sold quickly, and with Joe’s help, she arranged for an estate liquidator to sell the belongings she no longer needed. He also arranged for a moving company to pack and transport what was needed to Sue’s new apartment at the retirement community, and made sure she was content in her new home.

A few days later, Sue’s children visited their mother, breathed a sigh of relief that everything seemed under control, that a large project was complete and that – most importantly – Mom was happy, healthy,  and safe. Her daughter (who admittedly had been a bit annoyed at Sue’s “pickiness” in choosing an agent) smiled and remarked that Sue had made a fine decision in choosing Joe to spearhead the sale and move. “But Mom,” Sue’s son asked. “How did you make your decision? Why did you choose him?”

Sue dug into her purse and drew out the list of notes she had made while interviewing Joe:

When Character is More Valuable than Competence | Keeping Current Matters

As her daughters looked at the list, Sue remarked “I felt ‘OK’ with the other agents. They were undoubtedly good at their jobs. But I wanted someone who was good for ME too.”

And thus ends the happy story of Sue, a senior whose outlook on doing business mirrors that of most of her generation, nearly all of whom value a firm handshake and “good vibes” as much as they do hard numbers and competency.

Bottom Line

As real estate professionals serving seniors, it’s important that we understand that what makes for a great partnership, truly is in the eyes of our clients.

Non-Traditional “Retirement” Metros Becoming Meccas for Older Adults Who Want to Age in Place

Our guest blogger today is Nikki Buckelew. As the Founder and CEO of the Seniors Real Estate Institute, Nikki brings great insight into the Senior Market.

It’s probably only natural for real estate agents to assume that most boomers or retirees bent on moving to a new city to enjoy their golden years will be on the trail to Florida, Arizona, or some other state blessed with warmth and plenty of sunshine. And those states are probably the ones best situated to offer plenty of age-in-place benefits, right?

Nope.

When a boomer or senior who’s open-minded about where they wish to move and retire searches Google for the best cities to age in place or best cities to retire, they finds some spots that are a bit out of the norm, but quite intriguing nonetheless.

Places like Sioux Falls, SD; Provo, UT; Iowa City, IA; Bismarck, ND; Columbia, MO; Omaha, NE; Madison, WI; and Boston, MA top the list.

As adults 55+ begin to contemplate their future and plan for a possible move, they are hearing more and more about the importance of preparing to age-in-place. They already know they hope to live in their own home, independently, for as long as possible. And the cities listed above – plus many other non-traditional retirement options – are receiving plenty of attention as go-to spots for their aging-in-place benefits in the form of quality healthcare, accessible transportation, government initiatives in building the city as senior-friendly, and a number of other indexes.

The Milken Institute, a non-partisan think tank, compiled a list in 2012 of the 259 Best Cities to Age Successfully. Another ranking is due later this summer of 2014. It divided the rankings into “Large Metros” and ‘Small Metros,” with Provo, Utah topping the Large City list and Sioux Falls the Small City rankings.

Others in the Top 10 of Large Cities to Age Successfully include Pittsburgh, Toledo, Des Moines, Salt Lake City, and Washington D.C.

Others in the Top 10 of Small Cities to Age Successfully include Rochester, MN, Ann Arbor, MI, Missoula, MT, Durham-Chapel Hill, NC, and Gainesville, FL.

See the entire list here and learn more about the Milken Institute’s approach to promoting aging-in-place awareness: http://successfulaging.milkeninstitute.org/bcsa.html

Frankly, if I were a real estate agent or broker in any of these top cities (and even many further down the list), I’d be going full-bore to make sure I was positioned to capture as much of this older adult segment in my town as possible. Yes, older adults will purposefully be moving to my city and I should be the one to serve them and find a stellar house for them to buy. That would include promoting my area’s dominance as a haven for older adults, while working to ensure that I had the knowledge to properly help them. And oh yeah. Since older adults from outside the area will be searching online for information about my city, I’d want to make sure that I popped up front and center on Google as an expert in real estate for boomers and seniors in my town.

Simply put, lists like this give you plenty of marketing power – plus motivation – to grab a huge segment of business in your market that perhaps you never even knew existed.

Rethinking the 55+ Market

We are excited to have Nikki Buckelew back as our guest blogger for today. Nikki is considered a leading authority on seniors real estate and housing.

Mature Couple at ParkSomeone said to me recently, “Sixty-five is the new forty-five.” We chuckled, but the more I thought about it, the more I found myself in full agreement.

With more and more people working beyond traditional retirement age and the advances in modern medicine, the lines between middle and late adulthood are becoming a bit blurred.

What makes this relevant in the world of real estate?

As our population ages, we will see more and more organizations dedicating their marketing efforts toward the “senior” demographic. You have read previous KCM blogs about the various designations agents can earn for this specific purpose, and undoubtedly you have already seen real estate professionals in your market professing to “specialize”.

Reality check — not all seniors are the same.

Just as with using any label, we run the risk of putting people into a category when they may or may not actually belong there. This is especially true of the senior segment.

Despite the label of “senior,” there are 3 distinct types of moves you may encounter as a real estate professional — all three involve seniors, but they aren’t based necessarily on age. You see, age is not a good predictor of relocation. Instead, people generally make changes in residence based on life circumstances.

Listed below are the three primary types of moves made by those labeled as seniors:

Move #1: Amenity-based

These individuals and/or couples are seeking a certain type of lifestyle and their home is only one component of a much larger picture. When looking to sell, they are usually transferring their equity from one home to the next and can usually either pay cash or put a significant down payment towards their purchase. Depending upon employment status, they may be moving across the country for more appealing climates or seeking a place near an airport making it easier to commute. Some are moving closer to kids and grandkids, while others are moving to destination locations where the family can enjoy visiting.

Social engagement, including quality family and friend connectedness, are key decision-making elements.

Move #2: Anticipatory / Planning

As people age, they may begin to experience changes in personal health status or become the caregiver of a spouse requiring additional care. When this occurs, people may find their current home unmanageable or no longer suited for their current situation. Moving means simplifying and making preparations for future care needs and support. With this type of move, seniors are typically looking to either buy or lease a property with minimal maintenance, accessibility features, and in close proximity to quality healthcare. Family members and adult children may be called upon at this stage to assist, and will often have some influence in the relocation process.

Access to formal and informal support, as well as low maintenance and accessibility features, are primary decision-making factors.

Move #3: Needs-based

While most people intend to live independently until they die, unfortunately, this reality isn’t always possible. As health declines to the point where more support is needed than can be provided for within the person’s home and community, relocation is necessary. This move may involve selling the personal residence and relocating to a senior living community or into the home of a family member. In many cases, needs-based moves involve caregivers and/or family members as additional decision makers. Late-life moves involving frail elderly or those experiencing illnesses or disease processes can be highly emotionally charged and necessitate a level of empathy in addition to real estate competency.

Timing, health status, and caregiver support are keys to decision-making.

As you can see from these various different types of moves, not all seniors share the same housing needs and goals. And while specializing in the 55+ housing market appeals to many, there are actually many sub-niche opportunities within the senior segment worth exploring.

Regardless of whether you choose to make working with mature home buyers and sellers a part of your overall business plan, with at least 1 in 4 home sellers over the age of 65, there is little doubt you will work with older adults in the course of your general real estate practice. When encountering these opportunities, it will serve you well to consider the three types of moves listed here and evaluate your value proposition accordingly, so that you can be the very best agent possible for your mature clients.