What is Cash For Keys?
Cash for keys is a way for homeowners in foreclosure -- or for tenants who are victims of foreclosure -- to receive cash in exchange for surrendering the keys and vacating. Banks generally reach an agreement with the occupants of a foreclosed home, which stipulates the home will be left in good condition and cleaned. The agreements typically set forth a specific date that the home will be left vacant, including a promise from the occupants that they will not:
- Vandalize the foreclosed-upon home.
- Strip the foreclosure of light fixtures, appliances, copper.
- Leave foreclosure pets behind.
Why Banks Pay Cash for Keys
Although banks are not in the business of owning property, once they get title to the home through foreclosure proceedings, the bank is now responsible for the home. If the bank has to spend a ton of money to repair damage caused by the occupants, that money increases the bank's loss.
It can also cost thousands of dollars to evict a homeowner or tenant. It's also time consuming to go to court.
How Much Do Banks Pay to Exchange Cash for Keys?
The sum is negotiable. Banks typically do not automatically offer cash for keys unless the occupant first approaches the subject. To move out, these are reasonable expenses you may expect to recover:
- A security deposit and first / last month's rent
- Movers
- Rental truck
- Utility deposits
- Temporary living quarters such as a motel
Sometimes, if the occupant agrees to an immediate move out, banks might pay a bonus.
Do not try to extort the bank or the offer might be withdrawn. Be pleasant, courteous and reasonable, and you could get lucky by receiving cash to leave the premises.
At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.
