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What To Do If You Have Very Little, Zero, Or Negative Equity On Your Home.

Many, many Americans currently have little to no equity in their home. Reports showed in 2018 that there were more than 2 million of these homes in existence. In 2019, I’m pretty sure it’s safe to say there are even more. Homeowners that fall into this realm are stuck, and often in a sinking situation as they continue to fall behind without options of relief.

Homeowners typically fall into the state of having very little, zero or negative equity in a number of ways. From falling behind due to health issues or the loss of a job to less direct impacts such as market value fluctuations and bad mortgage terms. Regardless of how they fall into it, the reality of it is a harsh one. But there are options to get out of this bad situation and avoid negative credit marks such as late payments and even a foreclosure.

The most immediate way to get out of these situations is to sell the property. But the challenge is that you can’t list the home with an agent because there’s not enough equity to pay the hefty 10%+ fees associated with selling a home through an agent. But thankfully, there are still options.

Rent The Property

While renting the property is surely a strong option, it comes with some challenges–mainly that of being a landlord. Being a landlord can be a rewarding position, however, for many, it’s a bad experience as dealing with renters can be exhaustive and the unexpected repair and maintenance expenses can be draining. Additionally, the potential of renters not taking care of your home, or paying on time can put a landlord in a really bad position.

Despite the potential negative aspects, there are positives. Not only can renting a home offer relief by covering the monthly mortgage obligation, but you can also often set the monthly rent price above your mortgage payment, allowing you to cash flow off of the property. This means you can make extra money and keep some in reserves to handle maintenance and repair costs.

Renting a property is a strong option, but the risks should be calculated into your decision.

Selling The Property “For Sale By Owner” (FSBO)

The first thing to note about selling a property “for sale by owner” (FSBO) is that most homeowners never get to the point where they can sell the home on their own. Reports indicate that over 90% of FSBO attempts are unsuccessful. The truth is, it’s not because of the process, or interest, it’s generally due to the lack of reality of the homeowner.

Trying to sell the home for too much is one of the most common issues we see. Not all, but some think their home is worth more than what the market thinks. While it always makes sense to test the market for a short period of time to see what the market will pay for your home, it’s important to stay grounded in reality.

Remember that your goal is to get rid of the home, without paying fees and to avoid the potential foreclosure. But we’ve seen all too often homeowners trying to sell their homes on their own, and after six months, and potentially getting in an ever deeper and worst financial position, lose their home or destroy their credit.

Sell Your Own to a Company Like Logic Offer

We help homeowners in this very situation often. Little to no equity means you’d have to pay nearly 10% or more of the sales price of your home out of your pocket if you were to list it with an agent. Because we’re able to swoop in and make an offer and execute a purchase transaction on your home quickly, we can help turn a bad situation good, allowing you to meet your goal of moving on.

Even if you were ready to get rid of your home right now, we could lease the home from you, and sub-lease it to one of our tenants–freeing you of the hassles of being a landlord, while still keeping your home as an investment property. In this case, we’d fully cover your mortgage payment every single month, as well as the responsibility (execution and costs) of maintenance and repairs, so you don’t have to worry about anything.

If you’re in a bind and need assistance, we’d be happy to have a conversation to see how we may be able to help your situation. Our process is simple and we’ve answered most of our commons questions here. If you have any further questions, you can contact us here.

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