Is it possible to sell a house with no equity?

[Kanti]

Here’s a story about my friend that we went out to visit Sunday afternoon, we knocked at the door and were greeted by Dayna, and she apologized, saying that she had to do the cleaning today because her help hadn’t shown up. The house was even nicer on the inside than the rose garden suggested from the outside. I felt like I was looking through one of the houses I had seen in a magazine. White tile floors with blue accents matched the furniture and accessories. Blue glass place settings on the dining room table made it look as if we had arrived just in time for a formal dinner party. Dayna walked us through the house, showing off everything from the Jacuzzi tub in the master bath to a luxurious office overlooking the living room from above. I kept thinking, “Yes! This is nice.” The view of fields out the back was impressive and the kitchen was fit for a master chef.

We were making our way out to the pool by walking through the greenhouse when Dayna told me about her motivation to sell the house. With such a beautiful house why would you ever consider selling? I asked. Dayna’s tone dropped as she replied, “I run a cleaning business and one of my employees was hurt on the job. I didn’t have workman’s compensation insurance so now I can’t afford to make my house payments.” The pain was evident in her voice although I was impressed with her ability to hold her head up in such trying circumstances.

I can’t accept a penny less than $500,000. Dayna said. The house is worth a little less from the amount she was asking. This is a nice house in a nice area, in mint condition, Dayna explained that her monthly payments are $3150. This is the payment for a 90% loan on the house because she had put down 10% when she bought the property. She went on to explain how she had put an additional $50,000 into home improvements, and that’s why she can’t take less than $500,000.

Did any one know about some idea how I can help my friend to sell her property?

Kanti

[NINK]

equity doesn't matter, you can sell your house for whatever price you can get for it. first step would be to have a apppraisle, i mean if she has put that much money into it it should be worth alot mor ethna she originaly paid for it. she needs to advertise it, if she goes with a realetor she'd get mor eadvertising done but on the other hand she'd have to pay her her percenmtage if it sells.

[NINK]

was she taking taxes out of the person who was inured on the job? if not than the person could be concidered sub contratced and self employed and she would not have to have workmans comp insurance or be held resposible for injuries. just wanted to add that.

[Kelsey1224]

I agree with Nink...equity has nothing to do with selling the house at all. Equity is basically the value of the home which exceeds the money owed on it. Typically, it would be for the 10% she put down, plus any principal that she has paid since purchasing the house. It would also include any increase in the market value of the home since she purchased it.

For example...we just sold our home for just under $500,000, but we only owed $270,000. We purchased the home 13 years ago and had refinanced to do some remodeling. The additional $230,000 did not represent what we had personally spent on the home (although a small portion did.) The difference represented the difference between what we had mortgaged on the home and the significant increase in property values in my area. (S. California)

The problem for your friend may be if comparable homes in the area are appraised at less than her asking price. Most lenders will not lend for more than the surrounding area appraised value. For example...if comparable homes in her area are selling for $450,000, a buyer most like will not be able to finance for more than that amount...less than their down payment.

Now...if a buyer loves the house alot and are willing to spend the extra money out of their pocket to meet your friend's price...than something might be worked out.

Or...if you friend carries a note for the balance...but I'm not exactly sure how that works.

How long has she owned this home?