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Now that the Bubble Has Burst
How can sales counselors help prospects come to grips with the paper loss they’ve experienced on their homes, while encouraging them to move at what they believe is the bottom of the market? Contrary to what most prospects believe, selling a home in the current market is far from impossible. But how do we convince them of that? SB&A/BAR offers a few suggestions.
Education helps. Borrow from the experts to help prospects understand what’s happened. According to top real estate economists, there was no causality other than consumer psychology that pushed prices to an artificial high out of line with construction costs, interest rates, population growth or other predictive factors. In truth, the decrease in home values can be considered a correction, and if history is any indicator, it will take many years for property values to return to the artificial high of the bubble.
Accentuate the positive. For someone who spent his or her life savings to buy a home at the peak of the boom, losing that investment is potentially tragic. But for most of our clients, this is not the case. At a recent event for a client, a prospect from Scarsdale, New York bemoaned the fact that the value of her home had decreased by $300,000 to $1.2 million. Follow-up questions revealed that she and her husband had purchased the home 30 years ago for $65,000. A gain of 1,846% — not too shabby by any standards! Most of our prospects still have very respectable gains in their real estate investments.
Every cloud has a silver lining. With prices static or increasing very slowly, there is no longer a compelling financial reason for prospects to hang on to their homes. Since they won’t be giving up rapidly increasing gains in property value to move to a CCRC, there should be less resistance to making a move.
Support prospects in the sale of their homes. Develop a cadre of resources – appraisers, Realtors, stagers, moving coordinators and movers. Use these external partners to present seminars and to help prospects feel secure and supported in their move. There are countless other techniques – bridge loans, promissory notes, rent-until-sold programs and others.
Guarantee the sale. Several of SB&A’s projects are successfully offering Guaranteed Sale Programs (GSP). GSPs are generally for depositors and are managed through an external real estate partner. Realtors establish a fair market price for the house and implement a real estate term. If the house sells in the term, the Realtor will get anywhere from 6%- 8% of the selling price; if the house does not sell and the Realtor has to purchase it from the owner, the percentage owed goes up to anywhere from 11%- 15%. This type of program can be instrumental in giving prospects confidence to make a presale deposit. In truth, the guaranteed sale option is very rarely exercised, but the security helps prospects begin to plan for their life in a new community.
Deliver the true, powerful message that “life goes on in all economic conditions; the key is to do what is right for you today.” The most compelling reason to make a move has to do with quality of life and the possibility of healthier living supported by CCRC programs and services.
SUMMARY
There are logical and concrete reasons to support a senior’s move to a CCRC, despite the current market.
 Education helps
Enlist leading real estate economists’ theory that the current drop in home values is really the correction of an inflated market; prices are not expected to return to the same peak for some time.- Accentuate the positive
Most seniors’ homes have appreciated substantially from their original purchase price.
- Every cloud has a silver lining
With prices unlikely to rise anytime soon, the case for moving becomes stronger.
- Support prospects in the sale of their home
Assemble a strong team to meet seniors’ needs and ease the transition.
- Guarantee the sale
Guaranteed Sale Programs are being successfully utilized in a variety of retirement communities to give seniors peace of mind that their homes will sell.
- Deliver the true, powerful message that “life goes on in all economic conditions; the key is to do what is right for you today.”
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