What is Equity

Equity is, put simply, the portion of your home's value that you actually own. If your home is valued at $200,000 and you have a mortgage balance of $150,000, then your equity would be $50,000. When most people talk about "selling their home for equity," they are referring to a sale in which they would receive cash back from the proceeds of the sale that they could then use to pay off debts, make home improvements, or invest in another property. However, if you need to sell your house but don't have any equity, then you'll need to find another way to do it.

 

How Much Equity Do I Have

Before asking, how do I sell my house with no equity, you first need to know how much equity you have. To determine how much equity you have, you'll need to find out the current value of your home and subtract any outstanding mortgage balance or other debts that are attached to the property. If you're not sure what your home is worth, then you can use an online home value estimator like Zillow's Zestimate tool. Once you know your home's value and have subtracted any mortgage balance or other debts, then you'll have your equity figure. Don't forget to include fees associated with selling your house. These expenses include closing costs, agent commissions, and repairs. Even if your home has some equity, these expenses can quickly eat into your equity.

 

Issues With Having No Equity

The biggest issue with selling a house with no equity is that you may end up owing money to the buyer after the sale is complete. Another issue is that you may not be able to find a buyer who's willing to buy your home without any equity. This can be a particular problem if your home needs repairs or updating since most buyers will want a home that's in good condition. The problem is magnified if you have negative equity. Negative equity is when you owe more on your mortgage than your home is currently worth. In this situation, you may have to bring money to the table at closing just to pay off your outstanding mortgage balance.

 

If this is stressing you out, don't worry we help homeowners who are asking, how do I sell my house with no equity all the time. In fact, we buy houses with negative or no equity all the time. Just keep reading and we will show you a few ways to sell a house with no equity.

 

Selling A House With No Equity With A Realtor

Typically, when a homeowner wants to sell a house they list it on the market with an agent. This is a great solution if, you have time, patience, and equity. When you have little to no equity an agent commission can become a big expense. For example, if you owe $100,000 on your mortgage and your home is only worth $90,000 an agent who charges a 6% commission will end up getting $5,400. That is a lot of money considering you don't have any equity to start with. if you find yourself asking how do I sell my house with no equity, an agent may not be the right fit.

 

Another downside to listing your house with an agent is that you will need to make repairs to your home to get it ready for sale. If you don't have the money to make these repairs, then you may have a hard time finding a buyer who's willing to buy your home as-is.

 

Additionally, when you list your home on the market, there's no guarantee that it will sell. It could sit on the market for months or even years without a single offer. This can be frustrating and costly as you'll need to continue making mortgage payments, property tax payments, and insurance payments during this time.

 

Do A Shortsale

If you do decide to sell a house with no equity via an agent you may need to do a short sale. A short sale happens when the proceeds from the sale of your home are less than what you owe on your mortgage.

 

For example, let's say that you owe $200,000 on your mortgage but your home is only worth $180,000. If you find a buyer who's willing to pay $180,000 for your home, then you would need your lender's permission to do a short sale.

 

Getting a lender to agree to a short sale can be difficult and time-consuming. In most cases, you'll need to prove that you're facing financial hardship and that you have no other options for paying off your mortgage.

 

If your lender does agree to a short sale, then they may require you to pay some or all of the shortfall out of your own pocket. Additionally, a short sale will have a negative impact on your credit score which can make it difficult to get approved for a mortgage in the future. There is no guarantee that your lender will approve a short sale on your home. However, homeowners asking how do I sell my house with no equity, and who want to be just done with it, this may be the right way to go about things.

 

Selling A House With No Equity For Sale By Owner

One option for homeowners asking how do I sell my house with no equity, is to sell it for sale by owner (FSBO). This can help save some money since you do not have to pay an agent.

It's important to note that selling a house is not as simple as just putting a sign in your yard. You'll need to do marketing to drive buyers to your home, show your home to potential buyers, negotiate offers, and handle all of the paperwork associated with the sale.

 

Additionally, most buyers will want to have a home inspection done before they finalize the purchase. This could result in you having to make expensive repairs to your home which you may not be able to afford. If you want to sell your house fast without an agent that may be tough.

 

Rent It Out

 Another option to consider if you're asking yourself, how do I sell my house with no equity is to rent it out. This can be a great solution if you're not in a rush to sell and you don't mind being a landlord.

Before you decide to rent out your home, it's important to check with your mortgage lender to see if they allow it. Some lenders have restrictions on whether or not you can rent out your home.

If you're able to rent out your home, then you'll need to find a tenant, handle all of the paperwork associated with renting, and be available to deal with any maintenance issues that come up.

Renting out your home can be a lot of work and it's important to make sure that you're prepared for the responsibility before you decide to do it.

Before deciding to go this route check out our other blog post, Sell Or Rent A House to help determine if this is the right fit for you.

 

Sell It Subject To The Existing Mortgage

If you have no equity in your property your best bet may be to sell your house subject to the existing mortgage. In other words, you would find a buyer who would take over your mortgage payments.

If you decide to go down this route make sure your new buyer is credible and reliable. This type of sale is not for everyone and definitely has its risks.

 

If you do decide to sell your house subject to the existing mortgage it's important that you get everything in writing. This includes getting a promissory note from the buyer which outlines their obligation to make the mortgage payments. You'll also want to get a transfer of deed which legally transfers ownership of the property to the buyer.

When homeowners come to us and ask, how do I sell my house with no equity, this is our go-to option. Selling your house subject to an experienced cash home buyer can have many benefits.