Mortgages & Home Loans Real Estate Resources Why Home Sellers Without Equity Pay to Sell By Elizabeth Weintraub Elizabeth Weintraub Facebook Twitter Elizabeth Weintraub is a nationally recognized expert in real estate, titles, and escrow. She is a licensed Realtor and broker with more than 40 years of experience in titles and escrow. Her expertise has appeared in the New York Times, Washington Post, CBS Evening News, and HGTV's House Hunters. learn about our editorial policies Updated on May 31, 2022 Reviewed by Lea D. Uradu Reviewed by Lea D. Uradu Lea Uradu, J.D. is graduate of the University of Maryland School of Law, a Maryland State Registered Tax Preparer, State Certified Notary Public, Certified VITA Tax Preparer, IRS Annual Filing Season Program Participant, Tax Writer, and Founder of L.A.W. Tax Resolution Services. Lea has worked with hundreds of federal individual and expat tax clients. learn about our financial review board Fact checked by David Rubin Fact checked by David Rubin Facebook Instagram Twitter David J. Rubin is a fact checker for The Balance with more than 30 years in editing and publishing. The majority of his experience lies within the legal and financial spaces. At legal publisher Matthew Bender & Co./LexisNexis, he was a manager of R&D, programmer analyst, and senior copy editor. learn about our editorial policies In This Article View All In This Article Not Enough Equity Declining Real Estate Market Neighborhood Values Change Unexpected Repairs How Sellers Pay to Sell The Bottom Line Photo: Rolf Bruderer / Getty Images Closing on your home sale is supposed to be an exciting moment. The long process of selling is finally over, and you walk away with a nice check that you can put in the bank or use toward the purchase of your next home. Sometimes, however, home sellers can end up paying to close a deal. In fact, circumstances like this happen far more often than you might imagine. Let's look at what could happen to put a seller in this position—and how you can cope if it happens. Key Takeaways The costs associated with selling your home can exceed the amount of equity you have built up if you have not owned the home very long.Your home's value and sale price can be affected by changes in the neighborhood and by the real estate market as a whole.Last minute repairs can add significant costs and delay your home's closing.If you can't afford closing costs, you may want to consider borrowing money, tapping into retirement accounts, or applying for a short sale. Not Enough Equity If you've owned your home less than two years and took out a type of mortgage loan that was greater than 90% of the purchase price, it's possible you don't have enough equity to pay closing costs on a new sale. Closing costs, including a real estate commission, can run 7% to 11% of the purchase price. These are first and foremost the buyer's responsibility, but buyers will often negotiate for sellers to pay at least a portion. Declining Real Estate Market Perhaps you're trying to sell in a falling real estate market, which would mean your home might not be worth enough to generate a profit upon selling. Real estate cycles can make markets move down as well as up. Not every home appreciates every year, and sometimes you may have to time your sale during a downturn. Neighborhood Values Change Sometimes external factors or nearby foreclosures affect property values. When new subdivisions are built nearby and the homes are offered for less, buyers will gravitate toward the new construction, shunning slightly older homes. New commercial developments change the value of surrounding homes. Sometimes homes with views lose those views when high-rise buildings are constructed. Unexpected Repairs Few deals are closed until the buyer has completed a home inspection. Home inspections and pest inspections can turn up undisclosed problems or home deficiencies that run into thousands of dollars to fix. What can start out as a simple repair job may expose other problems when walls are opened up or roof shingles are removed. Note If a home inspection reveals a material issue, or something that needs to be repaired, prospective home buyers can make the sale contingent on these repairs. How Sellers Pay to Sell It's not always easy to figure out how to bring money to the table when you expected to get a check, but there are a few ways sellers in this situation can make it work. Tap Retirement Accounts or Borrow From Family In some cases, you may be lucky enough to have friends or family who can help you bring cash to the table. For example, one woman in Sacramento took out a home equity loan against her condo to help make the payments. When she could no longer afford to make the payments, she bought another home with 100% financing. Then she rented her condo and put it on the market. Her tenant was uncooperative, however, and made it difficult for the woman's agent to show the condo. The tenant had to go. Coupled with falling prices, this seller was going further into debt every month. This seller finally had to face the fact that if she wanted to sell her condo and not lose it through foreclosure, she would need to bring money to the table to close her sale. Fortunately, her parents gave her the cash. Bite the Bullet Sometimes you may be willing to sell even if it's not financially ideal at that moment. For example, one seller who was underwater insisted on selling because he no longer liked his neighborhood nor his neighbors. Out of all the homes in his subdivision, he was the only owner occupant. The rest of the homes were rentals, which pulled down the values. It was worth it to him to spend $30,000 to get out of that neighborhood and into a more desirable one. He withdrew the money from savings and bit the bullet. Ask for a Short Sale Not all lenders will agree to a short sale. There are specific requirements and conditions that will persuade a lender to forgive the debt. But, if the circumstances are bad enough and your lender will work with you, sometimes it's the best option. Note A short sale occurs when the home lender agrees to accept less than the full amount due on the mortgage to close the deal. If you decide to apply for a short sale, make sure you're aware how it might negatively affect your credit score. For example, one seller in North Sacramento had no assets, no income, and he had refinanced his home over market value. He owed more than the home was worth. For him, negotiating a short sale with the lender meant he could walk away from the property without a foreclosure on his record. He also had to pay taxes on the amount of debt that was forgiven, but that amount was taxed at a low tax bracket of 15%. Paying 15% of short sale taxes was preferable to bringing in the entire amount in cash, plus closing costs, to sell. The Bottom Line When you're underwater on your home—or barely have your head above it—there's no perfect solution. Every situation is different. At times, it may be better to hold out and wait for a better time to sell. If you find yourself in financially difficult circumstances trying to sell your home, talk to a financial advisor or CPA to help you weigh the pros and cons of bringing cash to close when you sell your home. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. NAIC. "The Smart Consumer’s Guide to Reducing Closing Costs," Page 4. Experian. "How Does a Short Sale Affect Credit?"