Incentives Grow to Get Struggling Home Buyers Moving

With distressed properties accounting for 30 percent of existing-home sales, more real estate professionals are finding a growing part of their job is offering struggling home owners “cash for keys,” according to a recent article at  

In the “Cash for Keys” program, home owners who are facing foreclosure are typically offered between $500 to $2,500 if they agree to move out within 30 days (and leave the place clean, too). The program frees home owners from their obligations while getting a little extra money for moving expenses and avoiding a ruined credit profile from a foreclosure. It also allows the lender to not incur the extra costs of an eviction.

The “Cash for Keys” program is expected to become a more mainstream option for handling short sales too, not just foreclosures. For example, Bank of America is piloting a program in Florida that will pay up to $20,000 to short sellers as well as forgive their loan deficiency.

Banks are looking at offering more incentives to short sales since their losses tend to be far less than a foreclosure. For example, foreclosure properties tend to sell for 40 percent below non-comparable non-distressed properties while short sales tend to sell for 20 percent less.

“The more the inventory builds up, the more generous the cash for keys from clients,” Benjamin Barber, a senior sales specialist Green River Capital LC in West Valley, Utah, told

Real estate professionals are often the ones who deliver the “cash for keys” offer to home owners. And as more real estate professionals continue to find foreclosures and short sales an increasing part of their job description, they’re seeking extra training in how to handle such situations with home owners and navigate these often-complex transactions. About 21 percent of National Association of REALTORS® members hold special certifications that help agents better handle distressed property — that’s up from 12 percent last year. For example, in one such designation, the Short Sale & Foreclosure Resource (SFR), real estate professionals learn how to aid buyers and sellers through the short sale and foreclosure process.

Source: “Real Estate Agents Learning Fine Art of ‘Cash for Keys,’” (Oct. 21, 2011)

6 years ago by in headlines , Market News , Mortgages , Real Estate Trends | You can follow any responses to this entry through the RSS feed. You can leave a response, or trackback from your own site.
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