The Home Equity Conversion Mortgage (HECM) is, without a doubt, the best mortgage in the marketplace today. Not surprisingly this opinion is held by reverse mortgage professionals and especially by reverse mortgage leaders who’ve taken the loan themselves.
While believing in the product you are selling is important it pales in comparison to the golden rule of sales- to understand the prospect’s needs.
As professionals, our enthusiasm for reverse mortgages can sometimes lead us to jump into explaining the product’s features and benefits. However, this can overshadow the more important step of first connecting with homeowners on a personal level, identifying their needs, and understanding their concerns.
When Logic Alone Falls Short
The HECM is a complex financial product that requires a detailed, accurate explanation of its features, benefits, protections, and borrower obligations. Yet, diving into this detailed information too soon can disconnect homeowners from their underlying emotions and motivations. Logic alone often fails to convince if we haven’t first tapped into why they’re considering the loan in the first place.
As it’s said, “People buy on emotion and justify with logic” yet we often reverse the order of this proven axiom. No one is suggesting abandoning a detailed professional explanation of how the loan works just not so early when meeting potential borrowers. Too much education too soon can blunt the underlying motivators that led them to inquire about the loan in the first place. On the other hand, making a sale primarily based on emotion without a logical explanation will likely lead to buyer’s remorse.
The Emotional Connection
Our emotions are shaped by how we interpret the world around us and our personal circumstances. Many older homeowners face anxiety, fear, frustration, or even despair about their financial future. Others may feel hopeful but uncertain about how to enhance their quality of life in retirement.
Understanding these undercurrents is imperative to helping bridge the gap between a logical understanding of the loan and their underlying emotional motivations. But where does one begin? Financial fact-finding is a good first step. Having a general picture of their financial situation you could say, “I see that your pension only pays 50% to your spouse after you pass. What concerns does that raise for you?” Or, if both partners are receiving Social Security benefits, discuss the potential impact of losing the smaller monthly benefit, a topic covered in last week’s column.
If cash flow is tight, you could ask, “How would having an additional $21,000 in cash flow a year from now feel?” Or, if there’s a concern about losing a Social Security check, “How would you feel if your spouse had access to a line of credit or monthly payments to offset that loss?
Making It Matter
The truth is, that the standout features of the HECM are meaningless unless they are linked to the homeowner’s specific needs, goals, or fears.
- The line of credit is a powerful tool, but what could it mean for the homeowner’s peace of mind?
- Tenure payments boost cash flow, but how will that improve their daily life?
- Eliminating mortgage payments can lift a financial burden, but what would they do with the extra funds?
By connecting each feature of the HECM to a specific need or desire, you build value and, more importantly, forge an emotional connection between the loan and a better quality of life.
The features and benefits of the HECM don’t matter until you make them matter and that requires knowing what matters most to them.
Shannon Hicks
Editor HECMWorld.com
As a prominent commentator and Editor in Chief at HECMWorld.com, Shannon Hicks has played a pivotal role in reshaping the conversation around reverse mortgages. His unique perspectives and deep understanding of the industry have not only educated countless readers but has also contributed to introducing practical strategies utilizing housing wealth with a reverse mortgage.
Shannon’s journey into the world of reverse mortgages began in 2002 as an originator and his prior work in the financial services industry. Shannon has been covering reverse mortgage news stories since 2008 when he launched the podcast HECMWorld Weekly. Later, in 2010 he began producing the weekly video series The Industry Leader Update and Friday’s Food for Thought.
Readers wishing to submit stories or interview requests can reach our team at: info@hecmworld.com.
2 Comments
A great reminder on connecting with the client and finding out the “why” before spewing program details. Thanks for your great content, Shannon.
Thank you, Michelle.