Retirement communities adjust as market makes it tough for seniors to sell homes

— Bill and Sharon Fankhauser spared no effort looking at continuing care retirement communities before moving into Vi at Bentley Village in North Naples last fall.

The couple visited one retirement community after another, perhaps 20 in all, starting in Vero Beach and crossing the state to Tampa and south to Naples. Their endeavor spanned seven years.

"I made a spreadsheet," Bill Fankhauser, 81, said. "I had a rating system. It was part of my spreadsheet."

That far exceeds the typical sales cycle, in both good and bad economic times, when retirees decide to sell their homes and move into a continuing care retirement community, called CCRCs.

"In our industry, it not uncommon for our sales transaction to take about 25 months, prior to the recession," said David Moreland, vice president of sales at Shell Point retirement community south of Fort Myers near the Sanibel Causeway.

When the recession endured longer than expected, the average sales transaction began to take up to 48 months, he said. Declining home values is the primary culprit — retirees were counting on equity in their homes to cover entrance fees.

"We could no longer succeed in doing business as usual," Moreland said.

That sentiment was widely shared in the industry and led to reduced entrance fees, refund options and real estate concierge services — all of which are available now in one form or another in Southwest Florida.

"For many years, Shell Point offered only one type of contract," Moreland said.

Moorings Park in Naples is the latest to offer different contracts, a possible sign that flexibility that didn't exist locally before the recession may be here to stay, even as the economy appears to be improving.

The entrance fee into a continuing care retirement community, which is a life-care contract as opposed to a real estate transaction, can start in Collier and Lee counties at around $200,000 for a one-bedroom independent living apartment and go up to $1 million for a larger apartment. There's also a monthly fee.

As a resident's health declines, they move from their apartments into assisted living and skilled nursing homes on campus.

Moorings Park announced in November that entrance fees for prospective residents would be discounted 10 percent to 15 percent, depending on the apartment selected, said Steve Brinkert, vice president of resident services.

Also new to Moorings Park is an option that's been available at Bentley and Shell Point since the recession — refund options of 50 percent or 90 percent, in case retirees want to move out, or die and want their heirs to receive the refund.

Contract cancellations escalated in 2008 and 2009 when clients couldn't sell their homes and wanted their initial 10 percent deposits back for an apartment in a retirement community.

"There are a number of people who would like that option," Brinkert said.

Joe Chambers, executive sales director at Bentley Village, said the contract options have been well-received but people typically choose the 50 percent or zero-refund contracts.

"Prior to 2006, all CCRCs in Southwest Florida were zero percent or nonrefundable entrance fees," Chambers said. "We switched in 2006. We found a lot of people liked the flexibility of not being locked in."

The refund options mean higher entrance fees of $60,000 to $100,000.

The refunds appeal to couples in second marriages and to those where the health of one spouse may decline faster than the other. They want to take into account that a surviving spouse may want to move out, he said.

Fankhauser and his wife, both 81, opted for the 50 percent refund at Bentley when they moved in last fall.

"The reason for that is my bride's family has a history of longevity and I don't," he said. "I am setting a new record for the family."

Fankhauser said his wife likely will move to Tampa to be near family after he dies.Asked if they would have moved into Bentley if the refund option wasn't available, he said "probably not."

* * * * *

The Fankhausers had no trouble selling their Boca Raton home in order to move into Bentley Village.

"We had a buyer right off the bat and the buyer gave us six months to move out," he said.

That's far from typical during a depressed real estate market and where some seniors are uncomfortable dealing with Realtors or selling their homes on their own.

"They usually exchanged equity in their home for the entrance fee," Moreland, of Shell Point, said of the pre-recession market. "When home values are 40 to 68 percent, it is a jolt to people."

Contract cancellations escalated in 2008 and 2009 when clients couldn't sell their homes and wanted their initial 10 percent deposits back for an apartment in a retirement community.

"Cancellation rates quadrupled," he said. "People were frightened, understandably."

Occupancy rates at retirement communities declined from 94 percent in early 2007 to 88 percent by the third quarter of 2011, according to the National Investment Center for the Seniors Housing and Care Industry.

To overcome the problems, retirement communities began offering real estate concierge services to prospective clients.

Moorings Park recently started a referral relationship with John R. Wood and Premier Sotheby's Interrnational Realty, said Bill Diamond, director of business development and sales director at Moorings Park. There's also a relationship with FineMark National Bank to help clients with bridge loans so they can move into Moorings Park before their home sells.

Diamond expects the new services to continue even as the real estate market improves for retirement communities.

"I think we will see a very good uptick in sales," he said.

Bentley Village offers a deal for retirees who are early move-ins, which is considered three to four months.

"The sooner someone could move in, the bigger the discount," Chambers said. "It just depends on the apartment itself, it can be up to 45 percent."

Bentley Village also has a relationship with a national relocation company in Chicago, Moving Station, which will arrange for a couple of Realtors to develop marketing plans for prospective clients' homes. The client can decide not to use the Realtors but if they do, there is no extra cost to them beyond the normal sales commission.

Enlisting relocation companies for seniors was common for new retirement communities and re-introduced to existing communities around 2006, he said.

All in all, the marketing options which retirement communities have adopted to survive the recession and beyond are working.

"We found this market has responded very favorably to the pricing flexibility," Chambers said, adding that he's optimistic for 2012. "I think it's going to be pretty strong. Folks are being more realistic about their home's value and they are being proactive rather than reactive."

© 2012 marconews.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

  • Discuss
  • Print

Related Stories

Related Links

Comments » 1

wardpo writes:

Good arcticle

Share your thoughts

Comments are the sole responsibility of the person posting them. You agree not to post comments that are off topic, defamatory, obscene, abusive, threatening or an invasion of privacy. Violators may be banned. Click here for our full user agreement.

Comments can be shared on Facebook and Yahoo!. Add both options by connecting your profiles.

Features