When Steve Dexter prepared to buy a foreclosed home recently in California’s San Bernardino County, he went to check out the property firsthand, which is always a good move.

Sure enough, Dexter found someone still living in the house despite the foreclosure.

But instead of calling the police, Dexter did something different: He went back and told the bank what was going on.

“I used it as leverage,” Dexter says. “I told the bank that I would take the property as-is and take care of the tenant myself but they would have to lower their price.”

The bank, Downey Savings—now a part of U.S. Bank (Stock Quote: USB)—agreed to drop the price by $32,000, from $229,000 to $197,000.

Then Dexter went back to talk to the squatter himself.

“The landlord had run the property down and the tenant knew that he would have to leave,” Dexter says. “So I told him where he could get a two-bedroom apartment cheap and offered to give him $500 to cover the deposit if he would leave the property.”

The tenant agreed and turned the keys over to Dexter, who managed to save himself a bundle.

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