What if I owe more than my house is worth?

Offer & Pricing · Updated

Being underwater changes the answer

If you owe more on the mortgage than the home is worth, you are underwater. We will tell you plainly: a cash sale to us usually will not work in that situation, because our offer would not cover the payoff. We would rather say that in the first phone call than waste three weeks of your time.

That is not the end of your options. It just means the useful ones are different.

Short sale

A short sale means selling your home for less than you owe, with the lender's approval to accept the reduced amount as payoff. It is the usual answer for underwater homeowners who need to exit with minimal credit damage and no deficiency judgment.

The catch is time. Short sales regularly take four to eight months. Lenders can refuse or counter offers, and second lien holders can block the sale. If a foreclosure sale is coming, you want to start at least 90 days out, and preferably sooner.

Where a cash buyer can still help is speed and certainty: a lender may approve a lower price knowing the sale will actually close.

Deed in lieu of foreclosure

A deed in lieu means voluntarily transferring the deed to the lender in exchange for being released from the debt. It works best when you have exhausted reinstatement, forbearance and modification, cannot afford any payment, and want to exit cleanly.

Lenders do not have to accept it. They often decline when there are other liens, when the property needs work, or when they believe they will do better at auction.

What we will actually do for you

We will look at your numbers honestly and tell you which bucket you are in. If a short sale is the right path, we can often refer you to a short sale specialist. We have referred homeowners to HUD-approved counselors, foreclosure defense attorneys, short sale specialists and bankruptcy attorneys when that was the better answer.

The one thing that makes every underwater situation worse is waiting, because the options that need months are the ones that disappear first.

Read the full foreclosure guide for all six options, or call us and we will give you a straight read on yours.

Related questions

  • How do I know your cash offer is fair?

    We publish our offer math: real North Carolina comparable sales, honest repair estimates from local NC contractors, and a reasonable margin for our business. Compare our number to any other buyer's. If ours is not fair, do not accept it.

  • How much below market value do cash home buyers pay in North Carolina?

    We typically offer 70 to 85 percent of what the home would sell for after full renovation. The exact percentage depends on condition severity, location and the current market, and our offer includes clear math so you can see how we got there.

  • I have equity in my home. Will foreclosure take it?

    Often, yes. Foreclosure auctions typically bring 70 to 80 percent of retail value, so if your home is worth more than you owe, the sale usually does not recover full value. A private sale almost always nets more equity than letting foreclosure proceed.

  • Is a cash offer better than listing with an agent in North Carolina?

    Sometimes, and not always. A listing usually produces the higher headline price; a cash sale removes commissions, repairs, closing costs and months of holding costs. Compare net proceeds and time, not sale price. If a listing nets you more, we will say so.

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