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Cash for Keys

keymichiganWith the large amount of foreclosures and load defaults today, many lenders have taken very aggressive action. One of the more innovative methods some lenders are using is known as “Cash for Keys”.

The lender often faces a lengthy process to recover possession of the property. In attempt to expedite the process, the lender may offer a cash amount as incentive for the occupant to vacate the premises before the deadline. Many homeowners or tenants see this as a way to help with moving expenses and to help in getting established in their new residence.

By having the occupant move and leave the property in a “broom clean” condition, puts the lender in a better position to begin the marketing process quicker.

The dollar amount can vary greatly.  We have heard instances of a few  hundred dollars to nearly two thousand dollars. Some lending institutions also use a sliding scale, with a larger dollar amount offered for earlier evacuation of the property. Not every lender will make such an offer, as lenders vary greatly on how they handle this.

Not only has this offer reduced the lenders amount of time to obtain the procession of the property, but it has also reduced their costs of maintenance or repairs of the property. Former occupants have been known to do damage to the property out of spite. If a cash incentive is offered, they will think twice about doing damage.

Often, vacant properties are a target of vandals looking for salvage building materials for resale or for copper, air conditioners, furnaces and anything else that can be easily removed and sold. By using a Cash for Keys incentive, the lender has better management of when the property is vacated and can secure the property promptly.

Written by Dave.