Selling a House When You Owe More Than It Is Worth

What Does It Mean to Be Underwater on a House?

You are underwater, or in negative equity, when the balance you owe on the mortgage is more than the house would sell for. Selling normally would leave a shortfall the lender still expects to be paid. It is a paperwork and money problem, not a reason the house cannot change hands.

Get two numbers before anything else: a written payoff quote from your servicer, which includes interest and fees rather than just the principal, and a realistic sale figure for the house as it actually stands today. Owners are often working from a balance that is months old and a value they last checked years ago.

Can You Sell a House If You Owe More Than It Is Worth?

Yes, in three ways. You bring the difference to closing in cash. The lender agrees to accept less than the full balance, which is a short sale. Or the gap turns out smaller than expected once fees are stripped out. BEVA Homes has closed DFW sales down all three of those routes.

The route that is closed to you is the ordinary one, because the title company cannot transfer clear title while a lien larger than the sale proceeds sits on the property. Everything else is a question of who covers the difference and whether the lender will agree.

What Is a Short Sale?

A short sale is when the lender agrees to release its lien for less than the full amount owed so the property can be sold. The lender has to approve the buyer, the price and the terms, which is why it takes longer than a normal sale and why nobody can promise you one in advance.

Expect the servicer to want a hardship letter, financial documents, and its own valuation of the property. Expect weeks rather than days. A second mortgage or a home equity loan means a second lender has to agree as well, and that is usually where these deals slow down or fall apart.

Is a Short Sale Better Than Foreclosure?

For many homeowners it is, because the sale happens on agreed terms rather than at a courthouse auction, and you keep some say in the timing. But both affect your credit, and the exact consequences depend on your lender and your circumstances. This is a question for a Texas attorney or a HUD-approved housing counselor, not for a cash buyer.

One thing worth knowing about the calendar: Texas foreclosure sales are held on the first Tuesday of the month, and the timeline running toward that date is fixed. If a posting has already happened, the window for arranging anything is short, which is a reason to make calls now rather than next month.

Will the Lender Come After Me for the Difference?

Sometimes the lender releases the remaining balance and sometimes it reserves the right to pursue it, and that difference lives in the wording of the short sale approval letter. It is the single most important document in the whole process. Have a Texas attorney read it before you sign, every time.

Forgiven mortgage debt can also carry tax consequences, which is a question for a CPA rather than for anyone involved in the sale. BEVA Homes will not tell you how either of those will land for you. Any cash buyer who does is telling you something they cannot know.

Where Does a Cash Buyer Fit In?

BEVA Homes gives the lender a real buyer, a written offer and a firm close date, which is what a short sale package needs to move. We also charge no commission and pay the closing costs, so less of the sale price disappears into fees and more of it goes against the balance you owe.

What BEVA Homes cannot do is make the lender agree, promise a timeline the servicer controls, or advise you on whether to do this at all. Call us with the payoff figure and the address, and we will tell you within a day whether a sale looks possible. If it does not, we will say that too.

This page is general information about selling a Dallas-Fort Worth property with negative equity. It is not legal, tax or financial advice. Short sale approval, deficiency liability and the tax treatment of forgiven debt depend on your lender and your circumstances, and those questions belong with a Texas attorney, a CPA, or a HUD-approved housing counselor.