Sell a House Without Equity

Sell a House Without Equity

Do you have to relocate due to work or want to move to a bigger home? If this is the case, then you would need to sell your home. Selling a house shouldn’t be a problem. You can easily just contact a realtor and get your home listed for sale. Right?

However, it’s not so simple when you do not have enough equity to sell your home. 

In these situations, you might have to sell to cash home buyers in Watauga or need to make rash decisions to avoid foreclosure. 

We understand the dilemma you might be going through as a homeowner trying to sell a house with no equity. As such, we have compiled several options for selling a home with little or no equity.

man calculating home equity

What Is Home Equity

Home equity is the amount of your home that belongs when you remove the mortgage you still owe. Here’s an example, let’s assume that your home value is $300,000, and you owe a mortgage of $200,000. This implies that you have $100,000 in equity.

Now, let’s discuss how to calculate how much home equity you have. Home equity works with the value of your home. Hence, it can be good news or bad news, depending on how the worth of your home goes.

Here’s a simple breakdown of what we mean. Suppose your home is worth $300,000 during the sale, and you had $50,000 while you took out a mortgage of $250,000. So at the start, you had $50,000 in equity. 

Over time, suppose you have been paying your mortgage on time and now only owe a mortgage of $200,000. Plus, the value of your home increased to $350,000. That’s good news because you would now have about $150,000 in equity. 

On the other hand, suppose the value of your home drops from its initial $300,000 to $280,000. Now, this would be bad news because you would have just $80,000 in equity – $20,000 less than what you would have if the worth of your home was still at $300,000.

To determine your home equity, you would need the help of a real estate appraiser who can give you an official evaluation of the worth of your home.

How Much Home Equity Do You Need to Sell?

Homeowners often sell their homes even with a mortgage to pay because it takes about 15 to 30 years to fully repay the loan. However, people generally wait until they have enough equity in the home to afford the closing costs and still walk away with extra funds. The trick is figuring out how much equity is enough to sell.

Usually, the amount of equity needed to sell your house depends on why you are selling your home. If you are selling your home because you have to relocate, then you will need about 10% equity of your home to sell. 

However, if you are selling your home to move to a bigger house, then you would need a minimum of 15% and more to sell your home. These ratios aren’t set in stone, but they are the guideline ratios advised by several real estate professionals. With 10-15% equity, you can have enough money to cover home sale costs without spending any extra from your savings.

It is important to note that the more equity you own, the better and easier it is to sell your home. Otherwise, you might even have to pay to sell your home, which means you make no profit on the sale. If you need to do last-minute repairs or borrow from friends to cover the closing costs, you may end up paying to complete your home’s sale – a situation nobody wants.

Ways to Sell a House in Texas with No Equity

Luckily, there is a way to sell your home and avoid a pay-to-sell situation, even if you have no equity. Before you start wondering, “who would buy my house in Texas if I have no equity,” look at the options below.

Selling Your House to a Texas Cash Home Buyer

Selling a house with no equity doesn’t have to be tiring and time-consuming. Why do you have to spend so much time preparing to sell a home without equity when you can quickly sell your house to cash home buyers. 

Why prefer cash buyers? Several cash home buyers in Texas do an excellent job of offering you a fair price for your home, and you wouldn’t have to worry about paying any additional fee – such as a closing cost. You could do thorough research to ensure you are working with legit cash home buyers in Texas.

Short Selling on the House

Short selling is complicated, but it might be the best option for someone selling a house in negative equity. Many people refer to this option as a compromise sale. 

A short sale only occurs when a lender agrees by signing the decision to execute the deal and accept less mortgage than what is owed by the borrower to avoid a foreclosure. Although only employed when completely puzzled and out of options, a short sale is a better choice than a foreclosure, which will damage your credit score and future home buying ability.

Selling to a Property Investor

There are several companies that buy houses in Arlington with zero equity. However, this has a downside of accepting less than your home’s real estate market value. 

Property investors buy your home less than it is worth because they buy a house as-is and do all necessary renovations to sell at a higher price for future homebuyers. When selling to an investor, you don’t have to worry about cleaning your home or staying at your home; they aren’t interested in that because they aren’t the ones going to live there. They target those in financial distress so they can buy the house for less than it’s worth and sell for a higher price later. 

Selling to a property investor results in a quicker closing deal. However, it is essential to note that the decision to sell your home is ultimately up to you.

house with no equity for sale

What You Should Know Before Selling a House With No Equity

It isn’t unusual to feel a little frightened when you realize that you do not have enough equity in your home. However, you have to be careful before deciding on what to do. Several homeowners rush to sell their homes without weighing their options closely due to fear of foreclosure.

We understand that it is a critical time for you. However, there are some things you should know and consider before selling a home with no equity. Some of them are the following:

  • Be wary of scams when selling to cash home buyers.
  • Figure out if you can still save your home by getting a loan from friends or family. If you can, go ahead and do so.
  • Take your time before signing any contract or deal with real estate investors. 
  • Foreclosures affect credit history and may affect your future mortgage, so avoid it.
  • The final decision of selling your home is yours to make, do not be pressured or threatened by an investor to sell your home.
  • Don’t agree to unfair deals because you are financially distressed.


We know that it is challenging to sell a home with no equity but, we hope the alternative ways to sell a house we discussed above helps. When purchasing a new home, we recommend that you study the market thoroughly and ensure that you buy a real estate property whose value is more likely to increase rather than decrease in the nearest years.

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