Selling Your House at a Loss: Consider These Options When Your Home Turns into a Financial Burden

Many people consider homeownership a safe long-term investment. After all, overall home values have trended upward in every decade from 1940 to 2000, according to the U.S. Census. But despite rising home values, owning real estate (like most investments) doesn’t guarantee a profitable return. So it can be particularly painful to find yourself in a situation when one of your only options includes selling your biggest asset at a loss.

Maybe you got caught up in a bidding war, bought at a market peak, and now buyer interest (along with home values) has since cooled. Or you’ve experienced a sudden and extreme change to your financial situation, such as a layoff or death in the family. Whatever the circumstances, you should act early if you’re suddenly struggling to make your monthly mortgage payment. Selling at a loss is one option — but there are other avenues you can explore before taking that step.

For insight about selling a home during a turbulent financial time, we spoke with real estate pro Kim Batterman, a single family home expert based in the Fox Cities area of Wisconsin. Batterman works with 74% more single family homes than the average agent in the area.

We also connected with HomeLight’s Senior Lender Sales Manager Richard Helali, who offered an insider’s look at mortgage options that could help you hold on to your home — or let it go without falling into foreclosure.

Should you sell your house at a loss?

When to consider selling at a loss

If thoughts of your mortgage payment (combined with upkeep costs) keep you up at night, it may be time to sell. These are some reasons that selling at a loss could make sense — and free you from a financial bind that’s been weighing on you.

You fall behind on your mortgage payments and can’t seem to catch up

Perhaps you underestimated how much it costs to own and maintain a home. Or your company eliminated your long-time position and you’re going back to school. Maybe you’re facing catastrophic medical bills. You run the risk of a foreclosure if you miss too many payments. Selling, even at a loss, could be the better alternative.

You owe significantly more than your home is worth — and you’re struggling financially

Maybe the real estate market took a dive and you went overboard on past home renovations. You’re maxed out on second loans and now you owe more than your home’s value. Whatever the reason, you’re struggling to keep up with house payments, and you don’t see things changing anytime soon.