Banks sometimes aggressively market the deed in lieu option to homeowners who are behind on payments, even though a short sale is usually a much better solution for the homeowner and for the banks themselves.
However, the banks stipulate to the homeowner that the house has to be listed for 90 days before they can execute a deed in lieu of foreclosure. A deed-in-lieu of foreclosure is sometimes called "giving the house to the bank".
As a Louisville Realtor who specializes in negotiating short sales for homeowners, I get calls from distressed borrowers who want me to list the house for 90 days so they can do a deed in lieu of foreclosure.
Typically these homeowners just want to run the clock for 90 days
- They have no intention of selling
- They don't want to show the house
- They don't want to bother with the short sale hassle even though it would be much more beneficial to them than a deed in lieu
- They just want to use the free service of a Realtor because that's what the banks told them to do. The banks do not explain to the homeowner that a short sale is more beneficial to the borrower than a deed-in-lieu.
Ironically, I also get many calls from homeowners who got strung along by the banks who encouraged them to do a deed in lieu of foreclosure but ultimately told them that they do not qualify because of second mortgages and other liens attached to the house.
I politely decline the “run the clock for 90 days” listings.
What experiences have you had?