Foreclosed Homes: Cash for Keys

Posted on July 3rd, 2008 by hinson

Banks are resorting to blatant bribery in order to get homeowners to leave their foreclosed home without damaging it. By offering a homeowner a couple of thousand dollars, a bank tries to get victims of foreclosure to leave the home without being evicted and without damaging the house so much that it can’t be lived in. Homeowners who are not able to save their home may want to consider taking money from the bank. This offer from the bank is called “cash for keys”

Home inspectors and real estate agents are usually hired to present these types of offers to homeowners facing foreclosure. These inspectors and realtors are not connected with mortgage companies or owners so they come into the home foreclosure process as a third party. These individuals help negotiate the deal. The homeowner will get a small amount of money and they can use that money for a deposit on a new home or rental and for moving expenses. When the homeowner takes the deal they get the property back and it has no damage.

“Cash for keys” is being offered to victims of foreclosure because of what is called “buyer’s revenge” syndrome. Some victims of foreclosure will take out all of the appliances in the house, damage the walls, strip the copper pipes and sell them, rip the carpets, and let pets into the house to cause more damage. A home in this shape probably cannot be sold and the damage will have to be factored into the selling price.

Banks have realized that it costs a lot less to bribe a homeowner to leave the home without a problem then to repair the home or deal with the lost sales revenue. Homes in several markets will be unoccupied for months and this will add to the home deterioration without the assistance of angry homeowners. If the bank pays the homeowner a couple of thousand dollars in return for the home remaining in good conditions the two parties benefit slightly.

When a home is damaged after a foreclosure this does not help the bank or the home owner. Banks rarely sue for damage to a home so the homeowner will be protected against any consequences of their behavior and actions. If the home goes into foreclosure then it is obvious they would not be able to pay off any court judgments. Banks are finding that cash for keys deals will help prevent damage to their newly acquired property.

Since homeowners know that the bank does not want the house damaged, the homeowner can negotiate a high payment to leave the property unspoiled. Some banks will offer a couple hundred dollars to the homeowner while other banks may offer thousands of dollars to be sure that the property is not damaged. Of course it is not wise for a homeowner to try to blackmail a bank so they can get more money to leave but they should in fact negotiate the best deal. The eviction process can be time consuming and expensive so both the homeowner and the bank benefit by making the process as painless as possible.