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As more older adults state their desires to age in place in their current homes — and with baby boomers owning as much as half of all U.S. home equity based on different estimates — it’s easy to see the potential impact that such a large cohort has on a variety of different businesses, including home inspections.
This was some of the perspective shared by Matt Cook, the director of business development at HomeTeam Inspection Service, who shared with HousingWire‘s Reverse Mortgage Daily (RMD) how the growing number of older homeowners is impacting what he sees on a daily basis.
New construction
The reverse mortgage industry has, for a while, aimed to communicate the potential benefits of the Home Equity Conversion Mortgage (HECM) for Purchase program as a mechanism for securing a new home by using a reverse mortgage. But one impact that Cook has observed in his own business — at least anecdotally — is an apparent mistrust that older buyers have for new construction.
“They have quality concerns, specifically with how they’re built today,” he said. “Some feel like homes aren’t built like they used to be. So, even as you’re thinking about housing inventory, I can’t imagine a large number of baby boomers are building. I think they’re more or less sitting on what they have, or buying that 20- to 30-year-old home.”
Such quality concerns could be keeping some baby boomer clients from moving into newly constructed homes, Cook said. But interest rates are another element that is enticing baby boomers to remain where they are — particularly the homeowners who refinanced during a period of historically low rates who are then discouraged from taking a new, elevated rate.
Inspection requirements
Cook explained that his company is seeing a “big trend” in mortgage and title companies that require a home inspection as part of the transaction process, which he said could also apply to the reverse mortgage side.
“[It’s being done] just to verify the status of the home prior to releasing those funds,” he said. “For us, whether they’re aging in place, buying new construction or just buying a residential property, there’s an opportunity that we’re seeing, and it is growing from the inspection industry’s perspective.”
A home health checkup, or an instance related to a home equity line of credit or a reverse mortgage, could see an insurance company require an inspection with a plan for new coverage, which tends to be important for people in the inspection field.
When asked about the intersection between appraisals and inspections — particularly as it relates to a Federal Housing Administration (FHA) requirement that sometimes requires a second appraisal on a reverse mortgage — Cook conceded some similarities while also acknowledging that inspectors are generally more expensive than appraisers.
Forging connections
When asked if he saw a need for people in the inspection business to forge connections with reverse mortgage originators, Cook did not hesitate to answer affirmatively.
“We tell all of our franchise owners not to forget about banks, lenders and loan originators,” he said.
Cook also feels like reverse mortgage professionals are potentially great partners for home inspection businesses.
“Anybody buying a home, anybody getting a reverse mortgage or anybody getting a new insurance policy should really do their best to understand what they own, or the status of their home — especially before they take out more money, or before they get an insurance policy that may not cover a home’s full value,” he said.
But home inspectors also have reputations as “alarmists,” Cook said. This is because “they’re literally trained in school to find the biggest problems and identify them. If that client is not planning to move or plans to age in place, that’s a deeply personal thing.”
If engaging with a home inspector for a reverse mortgage client, finding an inspector who has a good “bedside manner,” so to speak, can be key to a successful relationship and transaction, Cook said.
“Home inspections are a great thing, and everybody should recommend them because everybody should understand the status of the biggest asset that they own at all times,” he said. “But make sure that you’re partnering with a home inspector who’s not going to scare your client, since that wouldn’t be good for the mortgage industry or the client’s psyche.”
