Recently, I went to a birthday party at a Palatine bar not known for its fine beer selection. I looked across the place expecting to see Bud Light or some other run of the mill offering, but like a distant mirage I saw the words “Bell’s Hopslam” engraved on a tap handle. This is a world class, high abv beer and it’s not easy to find. My main emotions were surprise, joy, elation and concern that I would spend the next morning in an iron lung recovering from this happenstance. Mainly, it was a nice surprise and it made for one fun evening.
Those in the middle of a strategic default or foreclosure may be in for a nice surprise too. Relocation assistance payments (more commonly known as “cash for keys“) are becoming the norm and the payments are getting larger.
In a foreclosure, the lender is entitled to possession of the property after the sheriff’s sale is confirmed in court. But it became common practice for the lender to pay the occupant between $1000 and $2000 for the keys to the property. This was done so that the property is delivered to the lender in good, clean condition. The lender would rather not physically evict the occupant because the property may be stripped or damaged by the owner.
Here is what is new in the cash for keys arena:
1. Payments higher. The last two cash for keys arrangements that I worked on were $7800 and $4000 respectively. These required possession in 30 days and a check was given when the keys were delivered. It seems like $3000-4000 is obtainable now, whereas $1000-$2000 used to be about the max payment.
2. Don’t expect an offer until after sheriff’s sale confirmation. Clients sometimes want me to ask for relocation assistance during the middle of a foreclosure. I tell them it’s not possible. The only time a lender will offer cash for keys is after the sheriff’s sale has finished AND the motion to confirm the sale in court has been heard and entered.
3. Real estate agent will leave calling card. I have had little to no luck calling the foreclosure attorney to initiate a cash for keys. They always say “call the lender” which is pretty much a fruitless exercise. Have your ever tried to just ring up B of A or Wells Fargo with no contact person? Not fun. Here is what I see most of the time: After the confirmation of the sheriff’s sale, the REO real estate agent hired by the lender will put a card or flyer under your door with his or her phone number. They are very responsive when called because they want you out of there so they can sell the property and earn a commission.
4. Most checks are given when keys are delivered. I prefer that the agent give the owner a check at the appointment when the keys are delivered. Most of the time this is was happens. Sometimes the agent says that the check will be mailed. No one likes this. I try to speficy in the cash for keys agreement that the check will be delivered in exchange for the keys and will not be mailed afterward.
5. Can’t always get what you want. About 20-30% of the time the lender will not offer a cash for keys. Often, the REO real estate agent initially will say that no relocation assistance is offered and then will come back a week or two later and offer it. So hang in there and wait a few weeks.
6. House has to be occupied. It is best to leave curtains up at the property and some personal property there. If the house/condo is clearly and obviously vacant, the REO real estate agent may just re-key the property and you will not get a cash for keys payment. I have had 2 instances in the last year when REO agents trotted into occupied properties and changed the locks. They are not supposed to do this. In both cases, when I called them the locks were changed back and we later received cash for keys payments. If the property looks like an abandoned haunted mansion, don’t expect to get a cash for keys.