How to Sell Even When in Negative Equity

Is there still hope if you have no equity, or even if you are in negative equity?

Since their peak in 2007, property prices fell back sharply and the market remains slow. If you’re one of the millions of people with little or no equity in your property, what can you do?

It really depends on whether you want to sell or need to sell.

If you want to sell your property

Perhaps to relocate for work, to emigrate, or to buy another property that better suits your needs – then you should consider all the options open to you.

The best way is likely to be by using an Estate Agent.

You will need to make it clear to the Estate Agent you choose that you can only accept offers above a certain amount. Normally this will be the amount required to clear any mortgages and secured loans on the property, although if you have savings, or access to funds (for example an ISA) you might want to consider selling for less than you owe and making up the shortfall.

If your property is well presented and reasonably priced, and you are prepared, if necessary, to wait some time for a sale, then selling if you have no equity is still possible.

Lenders will very rarely agree to allow you to sell without clearing their mortgage or secured loan in full. If they agree to accept a shortfall it will usually be because the property is in danger of being repossessed and they fear they will get even less should this happen. So in practically every situation, you will need to clear their loan in full to finalise the sale.

If you need to sell your property

If, for example, you are in danger of being repossessed – then you need a solution that will enable you to achieve a quick sale without selling at a discount to the market value.

Depending on how much equity you have, there are two options available:

  1. Marketing your property at a competitive price using an Estate Agent
  2. Using a Creative Option, possibly involving an arrangement to sell in the future

If your property has negative equity then your options are limited, unless you are able to find funds to pay off any shortfall on your mortgage when you sell.

Unless you really must sell now you can only wait for the value of your property to increase. Negative equity is only temporary, although of course no one can predict with certainty when and by how much property prices will rise.

If you are in negative equity and need to sell now, you can look at creative options, although these will involve an agreement for a sale to complete at some time in the future. Such a solution might release some immediate cash for you and enable you to move if, for example, you need to relocate.

By Richard Watters

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