Banks are beginning to rely more and more on a unique method of bribing homeowners to leave a property foreclosed without causing damage to the home. For a few thousand dollars, banks try to persuade foreclosure victims to leave the home without having to be evicted and without ripping out any of the fixtures or rendering the home uninhabitable. Homeowners with no other option to save their home may want to consider this offer from the bank, which is called a cash for keys offer.
Local real estate agents or home inspectors are often the representatives that banks hire to offer these types of deals to homeowners. They are not directly affiliated with mortgage companies and do not work for homeowners, so they are inserted into the foreclosure process as a third party who can help negotiate a deal. Homeowners will receive a small sum of money, which they can use for moving expenses or a security deposit on a new apartment or rental home, while the bank gets the property free from undue damage or theft.
Banks are beginning to offer more of these kinds of deals in response to the “buyer’s revenge” syndrome that some foreclosure victims engage in before being evicted from a home. By the time the bailiff enters the house and the bank changes the locks, the former owners may have taken all the appliances, removed the copper pipes to sell for scrap, damaged walls, dumped hazardous materials on the floors, broken rugs, or let pets and animals into the house to cause even more damage. Obviously, houses in this condition are almost impossible to sell and will have to be listed on the market taking into account the serious defects in the sale price.
Therefore, banks have found that it costs them more to lose sales revenue than to simply bribe the owners to leave without additional hassle. Homes in many markets will remain unoccupied for months, contributing to the deterioration of the building, even without further destruction from former owners who will soon be evicted. If banks can put a few thousand dollars in the pockets of foreclosure victims in exchange for a home in the best possible condition, then all parties will benefit even slightly.
Destroying a home after failing to stop foreclosure will not help the former owners or the bank. However, homeowners are generally protected against the consequences of their actions, because banks rarely sue for damage done to the home. They know foreclosure victims won’t be able to pay their judgments anyway, and they are finding that it costs less to offer a cash deal for the keys to try to prevent any further damage to their new REO property.
Of course, knowing that banks do not want damaged homes, homeowners can negotiate a higher payment to leave the property in good condition. While most banks offer a few hundred dollars, others pay more than a couple thousand to make sure the home is not damaged. Obviously, landlords shouldn’t blackmail banks to get more money to leave, but a fair cash deal for keys can benefit banks and landlords alike. Following the eviction process can be expensive and time consuming; both banks and owners have something for which the other can negotiate. Banks want clean property and homeowners want an incentive not to vent their frustration on a property that no longer belongs to them.
