Usually considered a last resort by residential builders, home purchase programs and bridge loans are gaining traction as necessary tools to lure seniors to age-restricted projects.

Moving Station, a Chicago-based relocation company, reports an uptick in demand for its home purchase program that was introduced about six months ago. “It's like insurance,” explains Pati Saulig, vice president at Moving Station. Seniors who want to move to a new community are guaranteed their homes will be purchased.

Here's how it works: The developer pays 2.25% of the home's value into a purchase fund used to buy back homes. The house is put on the market at no more than 105% of the probable sale price based on a comparative market analysis.

If the house remains unsold, the price is reduced after 60 days, and then again after 30 days based on pre-determined benchmarks and re-evaluations. After 180 days, the house is purchased at 91% of a final appraised value.

Actual home purchases should be rare, says Saulig. All but one of the homes in the program to date has been sold before an actual purchase was triggered. Developers whose mission is to lease apartments don't want to get stuck with houses to sell.

“We try to avoid buying houses,” says John Spooner, executive vice president at Greystone Communities in Irving, Texas. Greystone markets rental units in continuing care retirement communities and has purchased some homes in troubled markets.

Bridge loans that provide rent money until a home is sold are growing in popularity, too. Elderlife Financial Services, based in Washington, D.C., is currently working with 35 seniors housing operators — a total of 2,000 buildings. Big operators offering the program include Emeritus Assisted Living, Brookdale Senior Living, Sunrise Senior Living and Horizon Bay Senior Communities.

Elderlife offers new residents a loan of up to $50,000. Residents draw down the money as needed. Some seniors use the loan to avoid putting a house on the market at a time when prices are depressed. “One family said it would lose $90,000 by selling the house now, which amounts to two years in assisted living rent,” says Elias Papasavvas, Elderlife founder and CEO.

Elderlife recently dropped its one-time setup fee of $600 to $800 per loan charged to building owners. “It's greatly enhanced our adoption rates,” says Papasavvas. Elderlife pays the rent directly to the community. The money is often available within two days. Residents pay a one-time origination and support fee to Elderlife. With this fee, the loan's effective annual percentage rate ranges from about 9.99% to 12.5%.

Beginning late this fall, Elderlife plans to offer a home equity loan of up to $100,000. Unlike other home equity products, the loan can be applied to houses that are being actively marketed.

RonnDa Peters, corporate director of marketing at Senior Lifestyle Corp. in Chicago, doesn't think the loan is the best deal for the consumer. But the company plans to offer it as an option at its communities.

“It's convenient and the money is readily available. It gives the family peace of mind,” she says. Senior Lifestyle already works with several regional banks to offer bridge loans at some buildings.

As an incentive, building owners can pick up the Elderlife finance charges instead of offering a month's free rent. The amount works out to be about the same, says Papasavvas. “Covering interest charges for a year sounds like you're giving the incentive 12 times instead of just once.”