Behind on the house
When You Owe More Than It Is Worth
This is the one situation where a cash buyer is usually not your answer, and you should hear that before you spend a week talking to one.
Why a cash offer rarely solves this
A cash purchase works by buying below retail value. That discount is what pays for speed, as-is condition and certainty. When there is no equity, there is nothing for the discount to come out of. Subtracting further from a number that is already below the payoff makes the gap wider, not narrower.
So if the balance exceeds the value, the useful conversation is with your lender, not with us. The arithmetic behind why is on how much cash buyers pay in Augusta.
Work out the real number first
Before deciding anything, add up everything secured against the property. People routinely underestimate this by leaving items out.
- First mortgage payoff, including arrears, fees and per-diem interest, not the balance on your statement.
- Any second mortgage, HELOC or home equity loan.
- Delinquent property taxes. See delinquent property taxes.
- Judgment liens, contractor liens, HOA liens, and any federal or state tax lien. See tax liens.
- Georgia transfer tax and closing costs. See Georgia closing costs.
Compare that total against a realistic sale price, not an automated estimate. If the total is higher, you are underwater and a conventional sale cannot close on its own.
The routes that actually exist
Loss mitigation with your servicer
Modification, forbearance or a repayment plan. Start here. It is the only route that keeps the house, and it costs nothing to ask. See behind on payments.
Short sale
The lender agrees to release the lien for less than the payoff. Requires written lender approval, takes time, and is not guaranteed. A buyer willing to wait through approval is essential.
Bring cash to closing
If the gap is small and you have the funds, covering the shortfall closes the sale cleanly and ends the carrying costs.
Talk to a bankruptcy or real estate attorney
Particularly if a foreclosure is scheduled or a filing is already in progress. See selling during bankruptcy.
Get free advice before paid advice
A HUD-approved housing counselor has no stake in the outcome. The CFPB finder is at consumerfinance.gov, and per the CFPB they "can offer independent advice, often at little or no cost to you."
Be especially careful here. The FTC's mortgage relief scams guidance describes operators who target underwater and delinquent owners with advance fees and deed transfer schemes. Never pay a fee to sell your house and never sign a deed outside a closing.
FAQ
Underwater mortgage questions
What does it mean to be underwater on a house?
The total owed against the property, including the mortgage balance, any second lien, and any tax or judgment liens, is more than the house would sell for. A normal sale would not produce enough to pay everyone off, so the sale cannot close without either bringing money to the table or getting a lender to accept less.
What is a short sale?
A sale where the lender agrees to accept less than the full payoff and release the lien so the sale can close. It requires the lender’s written approval, which takes time and is not guaranteed. It is the lender’s decision, not the buyer’s and not yours.
Will I owe the difference after a short sale or foreclosure?
That depends on the loan, the lender, and Georgia procedure, and it is a question for a Georgia attorney rather than a buyer. Do not accept a casual answer from anyone with a financial interest in your decision, including us. Get it in writing from someone qualified before you commit to a route.
Can a cash buyer help if I am underwater?
Sometimes, but honestly less often than in other situations. A cash buyer purchases below retail, which makes the shortfall larger rather than smaller. If there is no equity, there is usually nothing for a discount-based offer to work with, and a short sale or a lender workout is the more realistic path.
We will tell you if we cannot help
Send the address and what you owe. If there is no equity to work with we will say so and point you at the route that fits, rather than tie up your house.
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