Dear TZ - I owe more than my home is worth! What should I do?

Real Estate Agent with Remax First Realty II 0790808

Dear TZ -

When I bought my house five years ago, it cost me $250,000 and I borrowed $210,000. Since then, my wife lost her job so we're having a tough time paying the mortgage. The problem is that we still owe $202,000 but the last realtor that we called said the house is only worth $175,000. What can we do?

- Umberto Underwater

Dear Umberto,

Unfortunately you're not the only one facing this very problem.  It's an issue that many homeowners are dealing with.  The good thing is not only are you not alone, there is are ways to help you get your home sold and not take a huge financial hit.  

You'll want to speak to a REALTOR(R) who has worked with Short Sales.  A Short Sale is not (as the name implies) a sale that happens quickly, but is when you sell the home for less than you owe on the property.  The best way to do this (in our humble opinion) is to work with REALTOR(R) that is teamed up with a Short Sale Attorney or third party negotiator.  

The process involves putting your home on the market at whatever price the REALTOR(R) says is fair based on the comps.  You may need to reduce the price if you don't have offers coming in.  Once you get an offer you'll sign it (no matter what the price is for) and your realtor will submit it to the attorney.  They will then negotiate with the bank to get the offer approved, this could take between 30 and in some cases up to 180 days to get approved.  The attorney will work so that you won't (in many cases) have a deficiency judement (the balance) against you.  In some cases you may difference between what you owe and what you sell for is deemed income and you may have to pay taxes on that amount.  

You'll want to consult with your REALTOR(R) and Accountant to determine how you should proceed.

Good luck!

- TZ


If you have a question about real estate you'd like to ask TZ about, email us at

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~ Wayne & Jean 

Union County, NJ - a great place to live and work!

If you're looking to buy or sell a property in Union County, call us at 908-917-4189 or email


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All opinions, information and data provided is deemed reliable but is subject to errors and omissions. Not intended to solicit other Brokers' clients. We cooperate with them fully. 

David Burrows
Classic Realty - Fairfax, VA
No Pressure, Just Seriously Devoted to Real Estate

Wayne and Jean, great advice that every upside down home owner should read. Thanks for sharing.

Mar 19, 2012 08:57 PM
Tracy Oliva
West USA Realty - Arizona - Fountain Hills, AZ
The Oliva Team Arizona Agents

Wayne, This is some good Info keep up the good work,and thank you for sharing,Good luck with your business in 2012,  E

Mar 19, 2012 09:00 PM
Morgan Evans
Douglas Elliman Real Estate - Manhattan, NY

I'm sure any owner who is faced with this situation is going to 100% appreciate working with a team of people who know how to guide them through the process is going to be extremely relieved. 

Mar 20, 2012 03:22 AM
Jon Quist
Tucson's BUYERS ONLY Realtor since 1996

Good advice. Even now most underwater owners know little to nothing about how a short sale might help them.

Mar 20, 2012 03:42 AM
Steven Cook
No Longer Processing Mortgages. - Tacoma, WA

Zuhl Team -- The other option they might have, if the home is in Fannie or Freddie's lists, especially if they really like the house and location, would be to see about getting it refinanced under HARP 2.0 which allows for those who are in this situation to get their interest rate brought down to today's numbers, which may save them several hundred dollars a month on their house payment.

Mar 20, 2012 04:35 AM
Larry Gatti
The Gatti Group at Keller Williams Realty - Louisville, KY

Sound advice.  It is a tough situation and sometimes even tougher to guide clients through that process and not come across as cold or not caring becuase it is such an emaotional time for them.


Mar 20, 2012 05:54 AM
Blatt + Cutino
Coldwell Banker Realty - Monterey, CA
Broker-Associate 831/206-8070*Call today*

The problem is that homeowners don't often think of the Realtor until they have stopped making payements or a dfault gets filed. It is best to consult your Realtor, attorney, negoitator ealry on.

Mar 20, 2012 06:14 AM
Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

Good, thougtful advice that could be applied to many these days. Thanks for the post!



Mar 20, 2012 06:43 AM
Wayne Zuhl
Remax First Realty II - Cranford, NJ
The Last Name You'll Ever Need in Real Estate

Good suggestion, Steven! I hope there are people that can be helped by HARP 2.0!

Mar 20, 2012 07:31 AM
J. "Diego" Marin
World Wide Realty - Irving, TX
Real Estate Solutions

Good information Team Zuhl, the important thing is to get the word out. There are so many homeowners in this very situation... and truly don't know what to do about it.

Mar 20, 2012 08:48 AM
Mel Ahrens, MBA, Kelly Right Real Estate
Kelly Right Real Estate - Hood River, OR
Customized Choices for your Real Estate Needs

Nice advice, and a way out, for folks in these difficult times. I'm hopeful that the market is turning and befroe too long homes like your example could be worth close to what it owed again.


Mar 20, 2012 08:53 AM
Beth Paterson
Reverse Mortgages SIDAC, LLC, NMLS #1790592 - Saint Paul, MN
CRMP, NMLS #342859

Good suggestions.  I emphasize working with one who has experience with the short sales and has the team as you suggest - if they don't have the experience and the team with experience they could be in a worse position.

Mar 20, 2012 09:13 AM
Bonnie Vaughan
Scranton, PA
CNE SFR - Buyers/Sellers - Lackawanna & Surroundin

Great blog and straightforward information.  Instead of walking away from a property the owners should explore their options marketing as a short sale.

Mar 20, 2012 10:49 AM
Phil Leng
Retired - Kirkland, WA
Phil Leng - Retired

Hi Wayne and Jean,

That is the standard short sale scenario.

Unfortunately, each and every seller in that situation has to process the pain and anxiety produced by the facts of the situation.


Mar 20, 2012 07:55 PM
Wayne Zuhl
Remax First Realty II - Cranford, NJ
The Last Name You'll Ever Need in Real Estate

Good luck Erica - I'd love to hear about your class!

Mar 20, 2012 08:40 PM
Cheryl Ritchie
RE/MAX Leading Edge - Huntingtown, MD
Southern Maryland 301-980-7566
I like the photo, the explanation that short means long, and the overall guidance on your feature!
Mar 20, 2012 08:46 PM