How Are Seniors Purchasing Into Adult Communities?

Active adults

When Del Webb opened the first age-restricted community in Sun City, Arizona, it was highly successful. Since then, a small percentage of couples or individuals over 55 have been buying homes in these types of communities to enjoy the ample amenities that many of them offer the residents. While some of the buyers are able to sell their homes outright and pay cash for a home purchase in this type of community, others use loans to finance their purchase.

Finding the Perfect Community

A large percentage of home buyers use the Internet to identify the active adult communities in locations that meet the required criteria. There are fairly complete directories online for these communities all over the world. Follow the links to the communities of interest, and contact them to get thorough information or visit them in person. Terms to search with are "55+ communities," "active adult communities," and "senior housing." "Retirement communities" almost always yields a list of assisted living communities or nursing home care homes. Many local newspapers have a real estate section where the active adult communities are often advertised.

Visiting the Communities

Nearly all buyers visit the communities of interest. Seeing the community and the selection of homes firsthand is the best way to make a decision. The sales staff in these communities can answer any questions about the community, the homes, the homeowner association fees and the financing available.

Selecting a Home

A number of factors are critical when selecting a home in the active adult community. Size, bedroom count, yard size, and floorplan layout and home features all have a big impact on living in the home for years to come. Many buyers cite energy efficiency as the driver behind selecting the home, since they are now or will be living on a fixed income. Besides the house payment, the utility bill is often their highest expense.

Signing the Contract

Many builders of these communities will write contracts on the contingency that the buyers' present homes will sell within a certain time period. The earnest money may or may not be refundable if the current home does not sell. Ask a local realtor about market conditions and the likelihood of the current home selling within the contingency period of the new home purchase.

Federal law requires that buyers of homes in senior communities must provide proof of age before a contract can be signed, such as a driver's license or birth certificate. The management prepares quarterly reports to submit to the U.S. Department of Housing and Urban Development to keep a 55+ community designation.

Some people buy homes in these communities for seasonal use and keep their current home, using the home in the active adult community for just part of the year. Others have enough cash to buy the home outright, simplifying the purchase process considerably.

Putting the Old Home on the Market

Buyers in senior communities often use a realtor who works in the local area to help sell the existing home, if the new home in the 55+ community will be the primary home. Getting recommendations on local realtors from friends or neighbors is a good way to find an agent to sell the existing home.

Financing the New Home

Factors like income, savings, credit score and the amount of down payment make a difference in the loans offered to finance the home. If the current home is paid for and on the market, the cash received from the sale can be used to refinance the original loan when the funds are obtained, or that money can be banked for the future. Make sure that the loan originated for the new home purchase does not have a punishing early payoff clause.

People purchasing in active adult communities often choose the home builder's preferred lender, which often offers financing incentives that benefit buyers such as upgrades to the home, no closing costs and no points added to the loan.

Resources

• Topm Retirements: Description of 55+ Communities