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Readers Want to Know...Cash for Keys and REO Property

By
Services for Real Estate Pros with AZ Veteran Notary Services CA BRE 01444168

I receive numerous emails on various topics that I have written with in the past.  I try to answer as many as I can personally, but I thought if one person takes the time to write me with a question then I have other readers who have the same or similar questions.  So, I decided to start a FAQ column.

From now on I'll be responding to questions via my blog - not to worry, I won't reveal any personal identifying information - I want to share with all.  If you write me, I'll send you the link to my answer, and I'll be sharing your question and situation with all who read my blog.

As I have disclaimed over and over again, I am not an attorney or am I licensed to practice law - which would include giving legal advice.  If you need legal advice - then find a suitable legal representative in your area - as laws do change from State to State and even County to County.

So, here is the question of the day:

So I've done hours of research on this topic and you seem to be the most knowledgeable person I've came across.

Here is my situation; I'm a renter of a recently foreclosed property. The "agent" has approached my 17 year old son and spoke to him regarding cash for keys - odd he would talk to a teenager about it but none the less. he offered $500 (all i could do was laugh when i heard this) which is not even equal to the deposit I paid little on the cost of moving expenses, time off work to locate a new place, cost of the credit check, 1st, last & a deposit on a new place.

So my question is... is there room to negotiate here and also, can the 2 week request to vacate be extended?

REALLY hope to hear from you soon,

V. C.

 

It's a shame you find yourself in this predicament, VC.  From what you share and from where I sit, you have two issues - one is your former landlord and the other is the bank who now owns the place you have called home.

Regarding the former, you need to research your local laws and consider filing a Small Claims case against your landlord who knowingly took your rent money (not to mention your deposit and security) and put it in his own pocket as it is more than obvious that the landlord was not paying the mortgage.  You should be able to file suit to recover all deposit money.  If your landlord rented to you after he was already in default, this may or may not be fraud which can possibly have criminal implications and/or civil penalties on top of what your actual losses may be.  This is why it is so important to consult with an attorney and not a REALTOR® for these types of questions.

Look into ‘rent skimming' which may or may not be criminal where you are. 

As a side note, I have to ask if you did not have some idea of what was going on?  In California, there is a Notice of Default (NOD) and Notice of Sale (NOS) which both get mailed to the property and posted on the front door.  I know that had I come home to my rental home and found either of these notices posted to the door, I would have insisted on making my future rent checks out directly to the lender - or withheld them completely if the landlord could not satisfy me that he was saving the property from foreclosure - at that moment his business becomes my business - but hey, that's just me and hindsight is 20-20.

Now as far as your relationship with the lender who now owns the property I agree it is unusual for a licensed professional to discuss this type of issue with a minor child - my guess is they were just lazy and felt like they were upholding their obligation to make contact.

The offer amount of $500 is typical for a lot of banks, as is 2 weeks - but yes these numbers are both negotiable. I have seen offers of up to $3500 and herd of them going up to $5000.   This number depends on which bank is offering it and the value of the home.  A rule of thumb that I have heard - but not seen, is an offering of up to 1% of the homes value.

However, you should realize that this is not an entitlement or anything that the new owner owes you.  Remember they are out a whole lot more money than you are and they are still willing to offer you funds - despite their loss.  Truth is it is cheaper to pay you to move than it is for you to be evicted and stay on for a couple of months.

As a renter, I can only imagine that your situation would be more sympathetic in front of a judge than the homeowner who hasn't paid the mortgage or any rent for the last 7, 8 or more months...and the seller should know this.  That's right; holdover former owners who get evicted are often in the home for 9 months or more without paying a dime - so you can see why the banks are in trouble if you multiply that by every home with brown grass in your neighborhood and then every neighborhood in the country.

As far as the 2-week window they offer, this too can be negotiated out to a month.  I have not seen it extend past that.  I have seen offers structured based on the time required.  In other words the bank may offer $1500 to be out in 2 weeks, $1000 for 3 weeks and only $500 for you to be gone in a month. 

OK, here is a hint for you in negotiating.  Whatever you negotiate make the effective date a Monday.  This will buy you an extra weekend to move out and clean up the place.  So if I have a "Cash for Keys" (CFK) agreement issued on a Wednesday and I make contact, I'll date it for the following Monday, which now gives the occupant 3 weekends instead of 2 to accomplish what they need to do.  Remember, the banks just want you gone so they can move on - and this should be an easy negotiation so everyone wind.

Blessings to all who read this,

John Occhi, REALTOR® - The REO Guy
Century 21 Crest - CrestREO
CrestREO.Com
Hemet - San Jacinto Valley
951-927-9473

Author of "What You Need to Know...About Foreclosure and How You Can Stop It!" - If you are a Hemet or San Jacinto Homeowner.

This blog and the contents written here is the intellectual property of John Occhi, Hemet California REALTOR®.  The views and opinions expressed are just that - views and opinions of John Occhi and those who comment.  Please note that I am not an attorney or a tax professional and any time I discuss either topic, I suggest you consult with the proper professional for relevant assistance. 

This blog is part of the ActiveRain Real Estate Network, which is a social network highlighting the best of Web 2.0.  Information is provided with the intent of educating and assisting home owners, home sellers, home buyers and real estate investors with information the can be used to make better real estate decisions. 

I am proud to be a full time REALTOR® with Century 21 Crest and the CrestREO Division who is proud to be a contributing member of the ActiveRain community.

Servicing THE REO Needs of Asset Managers, Banks and Lending Institutions in the Hemet - San Jacinto Valley, Temecula, Murrieta, Winchester, Wildomar, Menifee, Sun City, Perris, Lake Ellsinore, Moreno Valley, Romoland, Homeland, Nuevo, Banning, Beaumont, Cherry Valley, Yucaipa, Redlands, Mentone, Loma Linda and throughout South West Riverside County and The Pass Areas of The Inland Empire in Southern California.  If you are a buyer, investor, first time home buyer or are just interested in REO real estate, please contact us at the above website or phone number.

 

 

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Until Next Time, Have a Blessed Day,

John Occhi, ePRO, REALTOR®
DRE Lic No: 01444168


ePro,John Occhi,www.johnocchi.com,realtor      Certified Probate Real Estate Specialist Logo Awarded to John OcchiFive Star Logo,Certification,REO,Five Star Institute     

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This blog and the contents written here is the intellectual property of John Occhi, Temecula - Murrieta, CA REALTOR® in the South West Riverside County region of the Inland Empire of Southern California.  The views and opinions expressed are just that - views and opinions of John Occhi and those who comment.  Please note that I am not an attorney or a tax professional and any time I discuss either topic, I suggest you consult with the proper professional for relevant assistance. 


I am proud to be a full time REALTOR® who is proud to be a contributing member of the ActiveRain community.

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Comments (10)

David Spencer
Keller Williams Northland - Kansas City, MO
Show Me real estate in Kansas City

In the Chicago area yoy can have some success with $500 CFK's. My REO accounts tell me they have to pay $3000 in CA. Depending on the property, sometimes I just meet the Sheriff because its less cost to me. My locksmith has to bill me for the change even if I have the keys.

Aug 02, 2008 12:49 PM
John Occhi
AZ Veteran Notary Services - Marana, AZ
Mobile Notary Public/Certified Loan Signing Agent

David,

Thanks for the respnce.  Most of what I do is in the $500 range - but not al of it  It rally has a lot to do with the value of the real estate and the local economy.  75 miles away in Orange County, prices are triple or more than what they are in my market and so are the CFK payments.

Take Care,

John

Aug 02, 2008 01:03 PM
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Savvy Realtor - Ann Arbor Real Estate

John, nice to see you back here, hope all is well with Sherri. I think this is a fabulous idea for a series. Answer the questions the consumers are asking.

Aug 02, 2008 02:10 PM
John Occhi
AZ Veteran Notary Services - Marana, AZ
Mobile Notary Public/Certified Loan Signing Agent

Missy,

Glad to see you are still keeping an eye out for me.  I have been so busy - I left one company and am opening an office for another - focusing on REO's - going creazy.

thanks you for asking about Sherri, She is still with us but on a slow downward spiral.  Sleeps most of the time, which I guess is good.  I work from home, so I am here for her.

How's your daughter - has she (and you) survived her escapde?

I'm hoping to make this a habit again.  I have spent all day cleaning up my blog - deleting links to my old company and adding new ones - organizing and converting articles into PDF's and printing our a book to take to atrade show I'll be at the week of the 10th in Las Vegas. 

Did I mention I was busy?

Take care,

John

 

Aug 02, 2008 03:33 PM
Rudy Detgen
Troop Real Estate Inc. - Moorpark, CA
Realtor, Real Estate Agent, Homes, REO - Moorpark, Simi Valley

Hi John,

I have offered CFK's in both Los Angeles County and Ventura County. The most I have successfully presented to a tenant was $4500. This was in Los Angeles County on a property that was valued at $535,000. The lender gave a time frame of approximately three weeks. The tenants complied with the move out date and I handed them a check. The lowest amount I have given was $1300. The property was a condominium in Ventura County valued at $150,000. The tenant needed more time to find a new place. The lender gave them two more weeks.

Rudy

Aug 02, 2008 03:35 PM
Matthew Zgonc
Aksland Real Estate - Modesto, CA
Realtor, CFS, CVS

John, I agree with you. The CFK's are negotiable, but they want you to start at $500.00 to start and they give you a top price.

Aug 05, 2008 03:11 AM
Winston Westbrook
Westbrook National Real Estate Co - Victorville, CA

Great blog John. You pick some great topics to cover. It's almost like a virtual picking of your brain, lol. 

Feb 17, 2009 04:53 AM
Kristina Zack
Keller Williams Realty - Enfield, CT
Real Estate Specialist in Enfield

I have been having a tough time with one owner lately. They just will not answer the door at all and when I drive by at night..one little dim light is on in the house. So sad. I leave notes etc etc..no reponse. Going to have to be the hardway...

Mar 13, 2009 02:29 PM
Anonymous
Kathy LeTournea

Thank you so much for sharing with all of us.. God bless

Sep 01, 2009 07:30 AM
#9
Anonymous
Victor Caporale

How is the CFK recorded at the end of the year for IRS purposes?  What form should it be on, and what box?

Feb 05, 2010 09:10 AM
#10