4 Options When You Owe More Than Your Florida Home Is Worth
Sometimes you have to sell or move when it's not exactly profitable to do so. This is often the case when you:
- Bought a home during the peak of a market cycle and need to sell soon after, or when the market has turned downward.
- Are divorcing and need to liquidate an underwater house.
- Inherited an underwater home.
- Were relocated for work or military PCS.
- Can't afford the mortgage anymore.
- Have an underwater rental property.
- Need to sell before foreclosure.
- Have a second mortgage, HELOC or Partial Claim.
How Do I Know If My Florida Home Is Underwater?
If your estimated sale proceeds after Realtor commissions, closing costs, taxes and other expenses aren't enough to pay your mortgage and other liens in full, you may not have enough equity to complete a traditional sale.
EXAMPLE:
Home sale price: $300,000
Mortgage payoff: $310,000
Estimated selling costs: $25,000
Estimated shortage: $35,000
This has become increasingly common for Florida homeowners as the housing market has shifted. If you need to relocate and lack the equity to sell, you have four options:
Pay the Difference
This may be possible if you have some additional cash and wish to have the cleanest break. To figure out exactly what the shortfall would be, you will want to talk to an experienced, local Realtor to get an idea of what the home would sell for and to also estimate the cost of sale (commissions, title fees, legal, taxes, prorations, etc). Make sure you have an accurate assessment of what the amount will truly be.
Rent the Home
Renting is always an option, but you should carefully consider whether it makes sense for you. Who will maintain the property and make repairs? What will the expenses be? Are you ready to be a landlord? And most importantly - will you make a profit? Market cycles can take 10-20 years. You may end up holding the property longer than expected, so weigh the pros and cons carefully.
Walk Away and Risk Foreclosure
You may be tempted to simply walk away from the home, or "give the house back to the bank”. Unfortunately, giving it back isn't really an option; simply walking away can ultimately lead to foreclosure. The Florida foreclosure process can take years to complete, and even when the foreclosure is complete, you may face additional problems. Florida is a deficiency judgment state, giving the lender the legal option to pursue you for their losses after the foreclosure.
Consider a Short Sale
Lenders understand that sometimes a home's market value may be less than the amount owed on the mortgage, and the owner may lack the funds to make up the difference. This is called a short sale. A short sale is a documentation and negotiation process performed on your behalf by a qualified short sale real estate professional. Owners need to have a qualifying financial hardship to be approved and the short sale process will take a few months. If approved for a short sale, the lender agrees to settle the loan for less than is owed, and waive any deficiency, with no out of pocket costs to the seller, so that everyone can avoid foreclosure.
Selling a Florida Home When You Owe More Than It's Worth with a Short Sale
For homeowners who need to sell but don't have enough equity to complete a traditional sale, a short sale can provide a way to sell the property, resolve the mortgage shortage with lender approval, and avoid foreclosure. Here at Reid Real Estate Group, we've been specializing in short sales since 2007. We've helped hundreds of homeowners move on from their underwater homes and we can help you!
Will you qualify for a short sale? Find out now!
Minna has been a fantastic partner in selling our home. She was patient with us in explaining the differences between a short sale and conventional sale and helped us think through the pros and cons of each. During the process of the sale she was strategic and got us the best price for our sale. The process was painless and quick and every step of the way she managed each and every detail flawlessly.
D.L.
Last Updated on August 12, 2026 by Minna Reid
