A cash for keys offer is a deal
which a bank may make with a homeowner, in which the
homeowner is given a cash settlement in exchange for
vacating his or her foreclosed home. Cash for keys
offers are also made to renters. The advantage of
cash for keys from the point of view of the bank is
that it gets people out of the house quickly, and
the house is often left in better condition than it
would be in the event that an eviction was needed.
However, it is important for people to be aware that
a cash for keys offer is a last resort, because once
the paperwork is signed, you typically have no recourse.
In a classic example of a cash for
keys offer, the bank will initiate the foreclosure
process on a home, and indicate that it is willing
to pay the homeowner a set amount of cash in exchange
for the keys. The cash may be based on a percentage
of the appraised value of the home, or it may simply
be a static payment. If the homeowner accepts, ownership
of the home reverts to the bank, and a moving date
is set. The time to negotiate is when the offer is
made; if you feel that the offer is unfair, say so,
and you may be able to get a better deal, since the
bank just wants you out of the home.
In the case of renters, some banks
offer renters cash for keys when they foreclose on
a home to compensate the renters for their trouble.
The cash for keys settlement can be used to help with
moving expenses, and it is also designed to keep the
renters from complaining. For renters, foreclosure
can be extremely frustrating, because they may not
be aware that the foreclosure process has begun, let
alone proceeded to the point where they are expected
to vacate a home.
Without voluntary surrender of the
keys to a home, banks face a lengthy eviction process.
Running an eviction is expensive, and time consuming,
because while eviction notices are served and the
eviction is finally enforced, the house is simply
sitting there, and the bank cannot put it on the market.
By getting a so-called “broom clean” house
in exchange for a small cash settlement, the bank
can quickly turn it around; most banks do not like
to hold on to a real estate inventory, so they welcome
the opportunity to sell off their foreclosed properties.
In addition to helping banks cover
their losses quickly, cash for keys can also prevent
damage to the house. In some cases, people who are
evicted feel resentful and angry, and they may stop
maintaining the house or actively damage it out of
spite. As a result, a bank might need to invest in
some basic repairs to make a house salable before
putting it on the market, and this eats up more time
and money.
There are many good articles on the
internet on this subject. Here is a link to one of
the good articles which outlines the steps to follow.
ehow.com
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