Recently, I joined the ranks, 55 this year, of what some consider senior citizens. In addition to getting discounts at some major retailers and the chain where I get my haircut, I really started paying attention to an overabundance of options for homeowners 55 and over.
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‘Who knew?!’
I have cultivated “downsizing niche” buyers for several years, but when I crossed through the “senior barrier,” the scales fell from my eyes. And let me tell you, the baby boomers who are downsizing — they are doing it like boomers. And they (we) need some education on the new options.
Most agents, meaning me and a couple of my friends, have no idea these tools exist, which means “most agents” are leaving deals on the table.
The 55+ buyer segment is the fastest-growing demographic in real estate. But here’s the thing: Agents are competing for the same deals using the same outdated playbook. Don’t mention reverse mortgages, sell big, buy small, move on.
Meanwhile, agents who understand Home Equity Conversion Mortgages (HECM) for purchase are closing deals that “most agents” can’t and building referral clients who have resources.
It’s a trap
Most people approach downsizing like a simple math problem: sell the big house, buy a small one with cash, and bank the difference. But that cash doesn’t just sit there — it becomes taxable income if invested, or it slowly drains away to living expenses and healthcare costs. Meanwhile, your client moves into a home they can afford without leverage, when they could have used that equity to preserve liquidity.
My experience with clients in Northern California — San Francisco, Oakland, Berkeley, Piedmont — shows that the math often doesn’t work. Traditional all-cash purchases may trigger property tax reassessments in many states, though California’s Proposition 19 allows homeowners 55 and over to transfer their tax base when downsizing. At the same time, cash purchases deplete liquid assets that could provide financial flexibility in retirement — exactly when flexibility matters most.
The reverse purchase
A Home Equity Conversion Mortgage (HECM) for Purchase lets you buy a new primary residence with no monthly mortgage payments for life, turning downsizing from a liquidity drain into a strategic wealth-preservation move.
Here’s the simple mental model:
50 percent to 60 percent down payment from home sale proceeds + reverse mortgage for the balance = no monthly payments + full homeownership.
Rather than draining savings to pay cash, your client uses a portion of their home sale proceeds for a down payment —typically 45 percent to 62 percent, depending on borrower age and interest rates — financing the balance with a reverse mortgage that requires no monthly fees. This preserves hundreds of thousands in liquid assets for investments, emergencies or grandkids’ college funds, while eliminating monthly payments.
Bonus!
HECM purchases make things a lot easier for agents.
The financing contingency disappears. A buyer who can close with a federally insured HECM doesn’t need traditional loan approval. Your deal doesn’t fall through because the bank rejected it at underwriting.
More purchasing power. A widowed homeowner who wants to stay in her community doesn’t have to choose between location and liquidity. A couple who want to upgrade, not downsize, suddenly have options they thought were gone.
Referrals are built in. When a client feels understood and has creative solutions, they remember. They refer. They come back when life changes again.
You are so niche
Here’s where niche marketing comes into play.
This is when you identify which clients might benefit. Widowed homeowners. Empty nesters who want to upgrade. Retirees who want to stay in their communities but need better cash flow. These conversations happen years before they’re ready to move — which means years of referral relationships before you ever list their home.
Early planning improves terms and home selection, according to the National Reverse Mortgage Lenders Association. It also builds trust with clients who feel you’re thinking years ahead, not just closing this month’s deal.
Fine print (for you, not your clients)
Not all properties qualify for an HECM. Eligible properties include single-family homes, Federal Housing Administration (FHA)-approved condos and certain manufactured homes, while co-ops and many condos are excluded.
Your client must live in the home as their primary residence for more than six months annually and maintain it, including paying property taxes and insurance.
Closing costs are higher than traditional mortgages, including origination fees and mortgage insurance premiums. Federal law grants a three-day right to cancel after closing, and mandatory counseling ensures borrowers understand terms before committing pursuant to Consumer Financial Protection Bureau (CFPB) consumer protection rules.
Here’s what matters for your practice: HECM for Purchase eliminates financing contingencies and preserves cash. Everything else is specialist territory. When you identify a potential HECM buyer, you refer to a lender who specializes in this product. You focus on what you do best: closing deals.
For now
With baby boomers holding substantial home equity nationwide, an HECM for purchase can transform a property from a stagnant asset into a dynamic retirement tool. Agents who take the time to educate themselves on a variety of products and tools, with knowledgeable and trusted loan officers who are experts in this area, will be able to offer even more opportunities for their lifelong clients as their needs change as they age in place.
America Foy is a broker associate at The Grubb Co. Connect with him on LinkedIn and Instagram.
