Cash for keys is a situation where the new owner, typically the bank that foreclosed, pays the occupant a few hundred to a few thousand dollars to move out so the bank can take possession of the property. Cash for keys may save a bank the time, money, and hassle of going through the courts to evict the occupant. In some situations, the only reason the occupant continues to reside in the house is because they do not have enough money to move. Some lenders realize that the occupant needs enough money for a moving truck, a security deposit, and one to two months’ rent at an apartment.
The lender may send their real estate agent or maintenance person to the house to negotiate with the occupant. The lender may also hire an attorney to communicate with the resident. Typically, the bank will mail a letter to the house or have someone post a notice.
Some lenders are willing to negotiate the amount of the cash for keys settlement. For instance, a lender may offer $2,000 to the person in the house, but they might be willing to go up to $4,000 if the person negotiates further. If you are in the tough position of living in a recently foreclosed home, it may be worthwhile to negotiate a little. Just be careful not to play hardball with the lender, because they could simply file for eviction and potentially even obtain a judgment of some sort. And remember that the person the lender sends to the house may be a real estate agent or maintenance person who does not work directly for the bank. Be cordial with them because they may be your biggest advocate in the cash for keys negotiation.