Here’s another dark side to the recent increase in foreclosures across the country. What are the incentives for those facing foreclosure to continue to care for their properties? Pretty thin when you consider most lenders are unwilling to expend the effort to chase down property damagers. Check out this recent article from the South Florida Sun-Sentinel for the experience of real estate agents trying to sell foreclosed properties in South Florida. One agent reports that one of his more memorable experience was finding a 2-foot fish and cement poured down the toilet at one of his listings.
The article also mentions a recent national survey of real estate agents that reports roughly half of all foreclosed properties are returned to the bank with substantial damage. How are lenders fighting back? By changing the incentives facing these homeowners, of course. In a “cash-for-keys” deal, lenders offer homeowners money (typically $500 to $2,000 according to the article) to vacate the houses quickly and leave the property in reasonable shape.