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Jon, Home Seller in Miami, FL

Can you sell your house for less than what you owe the bank?

Asked by Jon, Miami, FL Mon Nov 26, 2007

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With everyone focused on short sale answers below you probably didn't get the answer you needed to hear. The answer is yes, but you are still liable for the amount left on the loan to the bank on the day of close. That mean, you being a chck to the closing table.

It happens all the time. The new thing is short sales, where you actively ask the bank to make a reduction. They don't have to do it nor should you expect them to if the owner has lots of assets.
2 votes Thank Flag Link Wed Nov 28, 2007
Contact a good lawyer, a solid real estate professional, and your lender to begin these discussions. While it may sound like a simple idea, many deals are blowing up after a ratified offer has been accepted by both parties due to the seller not communicating with the lender regarding a potential short sale.
1 vote Thank Flag Link Thu May 22, 2008
A short sale should not be taken lightly. It will affect your credit and it could affect your taxes. You will have to claim hardship with the bank and work through their system. You'll need to walk away with nothing or they won't let you do it. If you are considering this be sure to get good advice, there are a lot of people who want to "help" you and end up owning your home.
1 vote Thank Flag Link Mon Nov 26, 2007
Can you sell your house for less than what it is worth then buy another house and finance that money on the new mortgage?
0 votes Thank Flag Link Wed Jan 2, 2013
YES you CAN!!! It is called a short sale,and in this market there are plenty of short sales that are being done. I deal with a variety of lenders if you need any help please feel free to contact me on the necesaary step that need to be done (financials, hardship etc.) I work wit client in helping them successful shortsale their home and also receive the waiver of deficiency so they maybe able to start their life over mortgage debt free.

Thank you,
Tamika Moses
Keller Williams Partners SW
0 votes Thank Flag Link Sun Jul 1, 2012
Hi Jon,

Very Simply the answer is YES! The process is called a Short Sale. And on the back of a Short sale is who is responsible for the taxes. According to, President Obama’s 2013 budget proposal includes an extension of the Mortgage Forgiveness Debt Relief Act of 2007, the proposed extension is tenatively until January 1, 2015.

As your agent, we simplify the process by dealing with the banks directly for you. And walk you through any uncertainties.

Thanks for using Trulia.

Sonya Washington
Coral Shores Realty
0 votes Thank Flag Link Wed Jun 27, 2012
Hello Jon,

Yes, you absolutely can sell for less than what is owed to the bank, if it'sdone the right way.

There are many components to a successful short sale, with the main ones being:
1) Seller's hardship (hardship letter is prepared and financial forms reflect insolvency), something
to be discussed with your CPA
2) Successful marketing, sale, short sale negotiation (preferably with an experienced negotiator or CDPE realtor (CDPE is Certified Distressed Property Expert designation) - so that you get a waiver of deficiency from the short sale lender along with the approval of your short sale

I'd love to go over it in detail with you,

Irina Karan
Beachfront Realty, Inc.
0 votes Thank Flag Link Tue Apr 10, 2012
Of course you can do it. I got 100% approval in all my short sales and all of them got a debt forgivenes in writing. Don be afraid, talk to your lender and ask the question and then call a realtor and list your house.
Communication with the lender is the key to be successful in a short sale.
My service is FREE and I'll be glad to help any homeowner in distress.
Maria C Esquibel
Certified Distressed Property Expert
Property Expo Realty
West Palm Beach, Florida
0 votes Thank Flag Link Wed Feb 22, 2012
Yes! It seems that the only way to sell a house or condo is by
0 votes Thank Flag Link Sun Jan 9, 2011
Yes, you can sell your house for less than what you owe to the bank. We are helping many homeowners, just like you, sell their homes for less than they owe. Please call us directly to discuss your specific situation. Our services are FREE to homeowners. We look forward to hearing from you.

Eli Givoni, Director
Short Sale Department, LLC
Serving all 50 states
0 votes Thank Flag Link Sun Jan 9, 2011
selling your home for less than it is worth would be considered a shrt sale speak to your mortgage company since they would need to approve such attempt on you part.
0 votes Thank Flag Link Thu Jun 12, 2008
It's called a short sale.
It is a possibility - but you have to show serious financial hardship. You cannot simply say "I don't want to pay this anymore." You have to justify the process to the bank by showing them that you simply do not have the money to make payments anymore, due to a set of circumstancs beyond your control.

I would recommend you reach out to a short sale / reo expert - not just an every day agent. Short sales and distressed property is quite a bit different then your average resale, and most agents are ill-prepared to handle them correctly.
I would also recommend you consult a good lawyer, as there are some possible downfalls involved there. For example - just because you agree to sell the house for less then you owe - does not automatically absolve you of ALL responsibility to the bank. There are certain things in certain situations the bank can come back at you for.
All in all - short sale is an option - but I would consider it as a last option. Especailly these days - you're seeing a lot of programs popping up to help people avoid foreclosure, and avoid flooding the market with these properties. It's really not a good situation for anyone. You - the bank - other homeowners in the area. All potentially face some difficulties because of these situations.
0 votes Thank Flag Link Thu May 22, 2008
You can sell your home for less than you owe, however there are a lot of varibles to this process, normally the best situation for this route is to prove to the lender hardship, with the proper documentation the lender can approve a short sale. Contact a Real Estate professional in your market area that works with these types of properties they will be the most knowledgeable to answer your ?'s and explain the process to you.
0 votes Thank Flag Link Thu May 22, 2008
Usually Yes. There are some parameters and criteria that you as the owner and the property itself must meet. Actually, you wouldn't be selling the property, the bank would be, via an approved short-sale. The short sale is a process where yo must follow the guidelines set forth by the lender (bank). It is becoming very popular and the Short Sale is just recently giving property owners in an "upside-down" situation a way out. Keep in mind that are are possibly negative tax and credit issues that can disrupt your financial situation for years to follow. Seek competent legal and/or Financial advice and also the advice and counsel of a good, experienced agrent/real estate broker
0 votes Thank Flag Link Thu Dec 20, 2007
Yes, you can if you can prove to the bank that the property value is negative. I have posted a lot of information about Short Sale, which is what will be done. Visit my website for all the information related to this topic.
0 votes Thank Flag Link Mon Dec 17, 2007
Dear Jon,
This is call a short sale (sold up short) there is a deficent of equaity. You would need to call your Bank . You need to ask for the Mitigation dept. Do not speak to any one else but them.They will work with the borrow.If I were you I wouild work with a quailfied real estate agent.who can do all the work for you. The bank will pay the commission for you on that also,Thats if you can get the bank to do a short sale.
You will have to show that you are insolveny in order not to pay taxes on the money that was forgivin.the balance of the loan not paid may be considered income so plead insolvent.
I am a Real Estate Professional in Staten Island NY. So I know what I'm telling you is correct. Note!
The higher the loan amount the more likely they are willing to do it.
I would be happy to help you with more questions.
0 votes Thank Flag Link Wed Nov 28, 2007
I wrote a four part blog on this.
Local Laws may vary. I would also discuss with a good Realtor.

A Short Sale can be done if the lender cooperates.
0 votes Thank Flag Link Tue Nov 27, 2007
Keith Sorem, Real Estate Pro in Glendale, CA
You need to contact your bank to do this, as the bank has to be in agreement to take less than what you owe--this is known as a "short sale"--a short sale might be able to be instituted if you are behind on your payments--but being behind on your payments will definitely affect your credit rating. Do not look at this as an easy way out of what might be a painful situation.
Web Reference:
0 votes Thank Flag Link Mon Nov 26, 2007
Yes, the simple answer is yes you can, if you qualify. The best advice I can give you is to contact someone who is skilled in doing short sales, a local investor? or Realtor? this is not something to be handled by yourself. If you need help contact the people at to see fi they have an affiliate investor or quick sale agent in your county and state. They are reputable people with a nationwide networ and there is no fee to you the seller. Good Luck!
0 votes Thank Flag Link Mon Nov 26, 2007
Lorie brings up an important issue--the "deficiency tax" of right now, congress is examining a bill that would eliminate it, because there are so many short sale situations. Hopefully it will pass and that will be make it a bit easier to sell short sale properties.
0 votes Thank Flag Link Mon Nov 26, 2007
This is called a "short sale". You have to talk with your bank and see if they would entertain a short sale. If so then all offers would be subject to their approval.

Check with your accountant. The difference between what you owed and what the bank is considered income to you and you will have to add that to you tax return. President Bush had talked about removing this tax burden but I am not sure where that stands.
0 votes Thank Flag Link Mon Nov 26, 2007
Yes, you certainly can, and it is being done commonly now. It is called a SHORT SALE, and many lenders are accepting them, because the loss they take on the sale is still better than the costs they will incur to foreclose.
If you would like more information, go to my website, and click on REO's and Foreclosures. It explains it from a buyer's standpoint, but I'll be happy to explain to you how we can list and market your property as a short sale if you'd like to call me at 786-205-1133.
0 votes Thank Flag Link Mon Nov 26, 2007
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