Sell Your House Fast When You Don't Have Enough Equity

A house is considered to be in negative equity if its value is less than the mortgage already secured on it. It is usually caused by falling property taxes or prices.

Traditionally, in real estate sales, the seller pays for most of the cost of the transaction. Typical costs can be real estate commissions for buyer and seller’s agents, title insurance, escrow fees, real estate taxes, and often even fees for the buyer’s new loan.

In most cases, these costs will be in the range of 10% or more of the negotiated selling price. In today’s economy, money is tight for most people. An additional 3% can be negotiated and come out of your sales proceeds, particularly with the Federal Housing Administration. 

With that being established, it means that for every $100,000 in the selling price, between $10,000 and $13,000 will be taken out of your proceeds at closing. $10,000 to $13,000 is an unpleasant and difficult process to go through for any homeowner! That is the reason why many sellers cannot afford to sell under these conditions. 

If you’ve bought your home with 100% financing in the last 5 to 10 years, you most likely don’t have enough equity to cover these costs. And even if you’ve put up a 5% or 10% down payment, you may still be under payments due to the declining markets and no appreciation.