We all know what a deed-in-lieu is. The question is: How often does a DIL occur? In 80 short sales, I have zero DILs, as far as I know. I would like to know other people's experiences. I have a DIL in process where for the first time the client is keeping me involved, and I may be discovering why they do not occur. The complication/work/process would deter most of my clients. What are your stories with deed-in-lieu?
I have 2 clients whose got the message from their loan servicer's that DIL was an option after 120 on the market and no sale.
However, when short sale deals fell through, the servicers were not so interested in the DIL option. Both of these properties went back on the market and are under contract a 2nd time.
Maybe the seller needed to apply for the DIL, which they didn't do. Since there is no commission paid to an agent, I have not done any work on a DIL option.
DIL is easy. Bank sends the deed and the seller's sign it. Seller has 30 days or so to get out and sometimes the lender will offer cash for keys. The DIL is more economical for the lender than the foreclosure - very little attorney's fees. I've had one. Home has been on the market for 2+ years as an REO and over 4 in total. Bank is stuck on a price that the market will not bear and home being abandoned is now suffering from disrepair. Too bad. Wish they would have worked with the offer that was written 3 years ago.
@Kathleen That's the way is should work, I think. The Servicer/Investor should prefer to short sell the house, unless they think that the offer is not fair-market-value.
@KerryAnn This is the situation with my DIL-candidate properties. The Investor has an unrealistic view of market value, and everyone gives up. The only way to make this behavior understandable, to me, is that the Investor thinks they are being scammed, so they want to mitigate the fraud-risk and acquire the property.
@Walt I'm in the same position with a property where the Investor is rejecting $75,000, the property is totally trashed, I am sending them pictures tonight. "Do you really want to reject this $75K offer?"
It is very expensive for the banks to do a deed-in-lieu, and can take a long time to complete if it even gets considered.