Episode 43 - Getting listings from seniors!

Welcome to Episode 43 of the "If You List, You Last" podcast, hosted by Bob Mangold! In this episode, we dive into key topics for listing agents:

• Targeting Seniors & Reverse Mortgages: Learn how to leverage reverse mortgages as a financial tool for senior clients, a rapidly growing market.
• Important Stats: Did you know 65% of all listings in 2022 came from clients over 55? Find out why understanding senior demographics is crucial for your business.
• Market Update: Bob shares an in-depth breakdown of job creation stats and how they affect interest rates and the housing market.
• Reverse Mortgage Myths: Clear up common misconceptions and position yourself as a trusted advisor.
• Seniors' Emotional Transitions: Tips on handling emotional situations with empathy and clarity.

Bonus: Join the Real Estate Asset Advisor Facebook group to connect with fellow agents, ask questions, and explore high-performance opportunities in California, Arizona, Texas, and more.

Join our Facebook Group at: https://www.facebook.com/groups/realestateassetadvisors

Visit our website to watch replays of our Wednesday "Elevate Business Briefings" at: www.RealEstateAssetAdvisors.org

Download a copy of my book, "If you list, you last!" at www.IfYouListYouLast.com

Transcript

Hey, welcome 

fellow listing agents. Bob Mangold, the listing co chair with episode 43 of the If You List, You Last podcast. Now, as always, thanks for listening, sharing, and downloading. Today, we're going to talk about finding more listings by working with seniors and employers. and understanding reverse mortgages. Now they can be an extremely powerful financial tool for seniors when you know and understand the proper use of a reverse mortgage.

And you're going to want to be knowledgeable in it so that you can have intelligent conversations with seniors. In case you didn't know in 2022, 65 percent of every listing in the United States was by somebody older than 55. And in 2023 that number was 58 percent. So more than half of the listings going on are done by seniors.

So most agents are really unaware that you can use a reverse mortgage to purchase a home. Go ahead grab a cup of coffee and settle in and just a reminder Make sure you join our real estate asset fest. 

Just a reminder Make sure to join our real estate asset advisor facebook group so you can join in on the conversations share your thoughts Comments or questions on any of the topics podcast Here's another great reason to join the facebook group before I get started. I want to do one more topic We're looking for high performance agents to start and grow a listing agent in California, Arizona, Texas, Illinois Florida, and Kansas.

So if you're in any of those markets if you're the right leader, we'll actually invest in the marketing and infrastructure Of your business without taking any overrides or royalties Now if you're open to a conversation around that go ahead and join the facebook group and send me a dm. Okay, fair enough So let's get into this week's mortgage update and we can give you a bunch of statistics, but it's important you understand it So our good friends over at the bureau of labor statistics reported that there were 142, 000 jobs created in  August,  which was well below estimates of 160, 000.

Now there are 86, 000 in negative revisions to the previous two months. Last month's reading of 114, 000 was revised lower by 25, 000 to 89, 000, and May was revised lower from 206, 000 to 179, 000 last month.  118, 000 today. Almost half. Now, if you've listened to the podcast for any length of time, you understand what my feeling is about the BLS.

Because, folks, they're crushing the economy, reporting these nonsense numbers. The economy is worse than it appears, and people in the job market understand it. That was a total negative revision of 2020. 88, 000 people over the last two months of June. Now remember, what they want are those really big notices on the when they release these things, so it sounds better.

And then for the following two months, they revise it down. And last month, they took 818, 000 jobs that they had reported,  and they took them away saying, no, that wasn't correct. So far this year, The BL S has revised their original numbers down by a total of 365,000, and we only have data on the revisions, just really through June and one for July.

That means 20 percent of the jobs just this year really never happened. So clearly they're still having a problem and are on track for over 700, 000 in negative revisions. My own personal opinion, folks, This isn't a problem. This isn't an accident. It's done on purpose. Now, you've heard me talk about the faulty birth death model, right?

That's not people. That's businesses.  This month of the 142,000 jobs that were added,  a hundred thousand of them, a hundred thousand of them, excuse me,  came from. The birth death model  folks. Those are numbers pulled out of thin air. They're literally pulled out of thin air and it doesn't make any sense because according to ADP this week, that again, processes  25 million paychecks a week for people.

That showed that we lost jobs So again, the government is playing with your numbers to make the economy seem  Like it's better than it is now average hourly earnings, which measures weight pressured by inflation They rose four tenths of a percent which was hotter than what they were thinking at three tenths now year over year Average hourly earnings rose from 3.

6 to 3. 8. The estimate was 3. 7. Not a big miss, but again folks, what happens, we need inflation, or we need wages to continue to go up, to keep up with inflation.  But remember, higher wages also creates inflation. Now average hourly work hours worked increased from 32 point or 34.2 to 34.3, not a particularly big deal.

Average weekly earnings rose seven tenths with the year over year figure increasing from 3.3 to 3.5 year over year. So I know it's a lot of data, but what's it mean by and large means that you'll see interest rates going to continue to move down? I believe at an accelerated pace.  I think it'll happen after the election. 

The fed will definitely reduce the rate again has nothing to do with mortgage rates in september but you can see the economy slowing in a pretty accelerated pace. Okay? Which means eventually interest rates will come down. That's good news. Although remember, if interest rates come down and buyers flood the market, and there's not enough inventory, what happens to prices?

You guessed it, they're going up.  Alright, so let's get started about listings with seniors now. Listen guys, I get the term reverse mortgage can raise some eyebrows, and it's a good one. A bit of a unique beast in the real estate landscape, but don't worry. I'm here to break it down for you today So you can help your seniors navigate these transactions smoothly.

And by the end of today's session, you'll know exactly the reverse mortgages, how it impacts the home sale, and how you as a real estate agent can be the trusted expert your clients need, right? All this stuff out there about becoming or strengthening your value proposition so that, buyers understand why they should work with you?

It goes that way for sellers too. What is it that sets you apart? And the answer, my friends, is what you know upstairs, it's your knowledge. So whether you're brand new to reverse mortgages or you need a refresher, this is the place for you. So let's start with reverse mortgage 101, the basics. First things first, let's cover mortgage actually is because once you grasp the concept, everything else starts to make sense.

So a reverse mortgage is a special type of loan. It's simply a loan that works a little different. It's available to homeowners who are 62 or older. There are some proprietary lenders who will go down to age 55, but those are proprietary loan programs. The typical reverse mortgage that we talk about is the HECM loan guaranteed by HUD.

So that's, you got to be 62 or older. And instead of making monthly payments to the lender,  or you maybe make a lump sum, you actually don't have to do that. The homeowner can, believe it or not, be actually paid by the lender every month. They could get monthly payments, they could get a lump sum, but they can get a line of credit.

The line of credit pays a ridiculous amount of interest, so it's actually a really good deal  for that, and right now interest rates are higher, so the rates of return right now are around eight percent. But the big thing to remember is that there are no payments required from the homeowner as long as they live in the home. 

Does that mean they can't make a payment? And the answer is no. Why would somebody continue to make a payment if they didn't have to? Let's say they took this out when they were 62, but they were going to still work another five years. Remember, there's still interest on this loan. It's just deferred towards the end of the loan.

When somebody sells or moves out then the interest is due. Maybe they want to slow down the interest acceleration.  Until they stop working then they want to stop making payments All that does folks is it increases their line of credit and again at the current pace of about eight percent That's a heck of a good return.

Remember that line of credit is guaranteed by the government. So pretty cool, right? So it's a huge appeal to seniors who are house rich But cash for folks. I can't tell you how many people have significant equity in their home and they're struggling to pay their bills or buy groceries with a reverse mortgage.

They can tap into that equity without having to sell the home or make monthly payments. That will help their cash flow. Now. Here's the catch. When the homeowner either moves out, sells the home, or passes away, the loan has to be paid off, usually by selling the house. The reverse mortgage, the original loan amount, plus any accumulated or deferred interest, will Is taken from the proceeds of the sale, right?

So let me just give you an example. They take out a hundred thousand dollar Reverse mortgage and over the whatever period say five ten years they accumulate fifty thousand dollars in Unpaid interest  when the home is sold. Let's say it sells for 250  They take the 250. They pay the 150 off and the person or the estate walks away with a hundred thousand dollars  So why is understanding this key for real estate agents?

I can't tell you how many times over the years, folks, agents have said to me you know what, dude, I just stay in my lane. I don't need to know all this stuff.  And guess what folks, that's why the average real estate agent, in my opinion, makes about 44, 000 a year. This is your lane, this is your business, and it's your job to know what you can do to help your clients.

You may not be the one doing the loan, but you sure as heck, in my opinion anyway, need to be the one who's guiding your  potential client. Make sense? Now,  it's simple guys, and  Reverse mortgages are becoming more common as people age. There are 10, 000 people a day for the next 13 years, 10, 000 a day, that will turn 65 years old.

Guys, you have to understand this so that you can help them navigate the process. Make sense? That's going to give you decades and decades of job security. Because remember, as people get older, hey, they may take out a reverse mortgage at 65 or 70. But at age 75 or 80, chances are great folks, they're downsizing, or they want to move closer to the kids, or health changes their situation.

That's why it's such a great demographic. You've got a lot of people coming into it, and as people get older, They do one of those three things, right? They downsize, they've got health issues, or they want to be closer to kids, or they just don't want the hassle and headache of having a home anymore.

That's also possible, right? How does it affect the sales process? Let's talk about that. How does a reverse mortgage, if there's one on the home how does that affect the home sale? It doesn't.  All that happens, folks, is you just need to understand what the payoff amount is, and the seller would get that, or the client would get that. 

So the most common question that I get is, but Bob, what happens if they owe more on the home than it's worth?  And here's what I'm going to tell you, folks. I don't see that very often. As a matter of fact, I don't remember seeing it in a long time. But in the event that they did, understand this, when they took out the reverse mortgage, they paid 2 percent of the value of the property towards mortgage insurance. 

And so let's say the house was worth 500, 000 and they owed 750, 000.  When they sell a house, they just wash their hands and they're done. They don't have any equity, but they also don't owe anything. Now, what happens in the event that they pass away, and the heirs now inherit the house? And the same scenario, worth 500, 000, 750, 000 is what they owe.

Folks, the estate can actually buy that at 95 percent of the value. So about nine what would that be? 475, 000. So if the kids wanted to, they could actually buy the property and hang on to it and they would pay 95 percent of the appraised value.  And then the mortgage insurance would take care of the 250 plus the 5%.

Make sense? So the only thing that a seller really has to understand is what's their payoff amount, and then you figure out what the right price is. Then just list and market the property well like normal. There's nothing big that you need to do to know closing the sale  Again, no different you're gonna have a first loan payoff  Just like you would on any other loan folks a reverse mortgage is nothing but a loan the only difference  is that one has monthly payments and one has no payments with the interest deferred That's the difference Now there are guidelines and things that HUD's put in place to make it different, how much access they have to equity and things like that.

But at the end of the day, it's no more complicated than that. So closing a sale that has a reverse mortgage on it, there's no big deal about it. Now, there, there are a lot of misconceptions about reverse mortgages. So let's take those.  One by one. So misconception number one, the lender owns the home.

Probably the most common misunderstanding out there. Folks, the bank does not own the home any different than they did if you had a traditional, what would be referred to as a forward mortgage, meaning you make the payments and it lowers the interest, the loan amount, right? We refer to that as a forward mortgage.

No more than a bank owns that home. Do they own a home that has a reverse mortgage on it? Misconception number two, the heirs will be left with debt. I explained how the mortgage insurance takes care of that, right?  You don't have that issue. It's just  the mortgage insurance covers it so the heirs aren't going to be left with any of that debt now They might not have the equity that the parents had when they were younger But folks if that's the difference between your parents eating and being able to afford their medication That they get a reverse mortgage and you don't get as much when you inherit it I don't know about you, but for me, I'm willing to make that sacrifice so my parents have a good end of life, right?

I don't want my parents struggling like that. So reverse mortgage is a very powerful  financial tool for them to help them with their cash flow. You can't sell a home with a reverse mortgage on it. Like you have to get approval from the bank. Completely false.  Completely false. You don't need any pre approval for that.

Misconception number four is the bank can force me to sell the house. That's not true.  The bank, if you no longer live in the house, or let's say you went to assisted living or you passed away the heirs or the beneficiary are going to have a year to take care of that. Meaning, you'd either have to sell the house or refinance the house. 

But if mom and dad passed away, unless you want to take over the house and move in there, you just have to refinance yourself into it. But the bank's not coming and taking it away. A lot of that came from before 2015. Where what happened is if  let's say that the husband at the time, that you took out the loan was 65 And the wife was 60.

They could still get a reverse mortgage just the wife wasn't on the loan  prior to 2015 if the husband passed away or had to go into Assisted living and could no longer live in the house Then the spouse did have to either refinance or sell the house. So make no mistake, they had to. But they didn't come in and say, okay, you have 30 days, make this happen.

It was like you had about a year.  In 2015, they changed that. So if that same scenario happened today, The spouse can live in that until she's no longer able to or wants to.  She doesn't have to sell the home. Even if the spouse who is older passed away  And she wasn't on the loan. She can still stay in that house So the bank's not coming and taking out houses from underneath people, but if they do move out either an assisted living or pass away Then the loan does have to be satisfied within 12 months.

So make sure that you understand that right  now Here's some stuff that's pretty important when you're working with seniors number one, they're more scared and i'll be honest with you as a senior folks we have all kinds of people trying to pull scams on us every day. So they're naturally Hesitant,  so it's good that you provide proof of the things that you're telling people.

So it's always best to be You Totally clear and transparent. Put things in writing for people so that they're not guessing at it, or after you leave they have a document that they could understand even if it's a simple word document or, notepad if you've got good enough writing to write nicely, right?

The more you can be clear and transparent, the more it helps the family. Number two,  be a help with emotional transitions, right? It could be something like, one of the spouses now has to, move into assisted living or hospice or passed away.  You're going to have some empathy there. 

And so that's going to go a long way. That family's, struggling and suffering. Be patient and help them.  You can be a service. You can be a Point of light for them.  So please do it sometimes you have to get involved with their financial advisors. Guys, that's okay Because guess what if you're showing that you know your stuff and you're doing right by the family couldn't you start to formulate a referral relationship with a financial advisor or a CPA or things like that?

There's all kinds of tentacles to working with seniors. Remember this too folks, they generally have kids that could be 40, 35 to 40 to 50 to 55. Those people are going to have needs. Make sure that you stay in contact with the heirs that you're keeping them informed. Excuse me on what's going on So that you can do that  And then finally the more that you learn about this you can start to market yourself as a reverse mortgage specialist, right?

Now make sure you're working with a lender who understands What they're talking about and has actually done reverse mortgages many lenders for years I did not do a reverse mortgage I thought they were way more complicated than they really are and they're not But you need to be working with people that understand that and then you do have to educate yourself and keep your clients educated Because guess what folks it's mandated by the government how these things are run Which means they change the rules all the time.

So you have to stay up to date on that stuff, right? Maybe you look at getting a certification like the sres and things like that.  So here's my final thoughts  Seniors are a huge demographic that you should definitely be working in they can provide consistent cash flow transactions and referrals for decades  But you need to become an expert in that arena.

You need to be empathetic right  and make these things that are, turn them so that they're not intimidating,  right? Seniors have a lot of misconceptions about a reverse mortgage. Don't let them be intimidated by that, right? Especially when you understand how they work and how they impact a sale.

Now, as an agent, your role is simply to guide seniors and their families through the process.  with clarity and compassion and surround yourself with people who know and understand the process so you can be the best possible resource for your clients.  That's how you build your business. Now, by getting familiar with the steps involved, clearing up misconceptions, and working closely with lenders and advisors, You're going to be well equipped to help your clients make the best decisions when selling a house with a reverse mortgage And by the way folks in case you don't know you can use a reverse mortgage for purchase too So when the client is moving down right moving into a smaller house  They can use a reverse mortgage to purchase. 

So don't forget that. That's a huge tool for people. Now, there's a growing market for seniors who need your expertise. Just understand that, folks. They need your expertise. By understanding this niche, you can position yourself as a resource and a trusted advisor to fill that demographic for decades. So I encourage you to learn more about it.

There's a book you could get on Amazon. It's called under or I'm sorry understanding reverse  And it's a great book to read where it gives you the details Now, I know you're not a lender, but it'll help you understand the process I learned things that I didn't even know and i've been doing reverse mortgages for a long time go ahead and start to educate yourself and learn these things and go to seminars and if if you want an invitation to some of the classes that the lenders do, reach out to me through the Facebook group.

And when they're having those classes, I'm happy to get you the information on it. So the key is educate yourself. So that's it for this week's show. And remember folks, if you list you last, we'll see you next week.