101 Tips for Underwater Homeowners

Some practical advice for consumers with negative equity.


In light of the Zillow report, which shows that nearly a third of those who bought homes since 2003 have negative equity, I thought this article might be helpful.

From International Listings, via patrick.net:

Are you upside down in your home ownership? If you are, then you know that you can't borrow from your home equity for emergencies because you don't have equity to borrow against. You may not be able sell your home unless you come up with the money to cover the shortfall between your home's value and your loan. In this case, either your house has lost value, or the loan balance has risen, or both.

Sitting upside down with a home ownership is stressful, but there are plenty of tips and remedies for this situation. No matter if you decide to sell, walk away or sit it out, the following list contains ideas that may help you financially and emotionally as you go through this trying time.

The list below is in no particular order. While the sites are numbered, the numbering does not indicate that we favor one site over another or that they are listed in order of value.

Get Ready to Sell

Unless you're ready to ride out a volatile housing market, then you're ready to sell your home. In this case, preparation for selling a home is similar to any other home sale, but the tips below are provided with empty pockets in mind.

1. Limit emotional involvement: This house may have seen births, deaths, marriages and more. But, now it's a product that must be sold. If you can't step away from emotional perspectives, bring in a friend who can provide an unbiased perspective about what needs to be done to this "product" to make it more attractive to buyers.

2. Curb appeal: Potential buyers won't take a house seriously unless its exterior is enticing. Sometimes a little elbow grease is all that's needed to polish up that front door, to clean the windows and gutters and to mow the lawn.

3. Small stuff counts outside: New house numbers or potted plants go a long way to create an inexpensive and attractive facade. You might even borrow the potted plants.

4. Small stuff counts inside: No need to replace expensive items. You might be amazed at how quickly a kitchen can change simply by replacing doorknobs on cabinets or by painting those cabinets.

5. Less can be more: Sometimes the elimination of shrubs, plants, and the addition of mulch can open up a yard and make it more appealing. Once again, this effort just takes a work on your part.

6. Remove furniture: Sell it, give it away or store it. Home buyers often like to envision their furniture in a new home without the obstacles of your living arrangements.

7. Paint the interior smartly: If you're painting for resale, many parents will appreciate an easy clean-up paint with a satin finish. This paint also does well if you plan to rent the house instead of selling. See if you can find what interior decorator Jeanette Fisher calls oops! paint, or paint that has been rejected by potential buyers to save a few dollars on this renovation.

8. Hold a yard sale: If your neighborhood is conducive to yard sales, use this opportunity to clear out the house, make money, and to tell people the home is for sale.

9. Use consignment shops: Or, thrift shops or second-hand stores to sell items you don't need.

10. Go secondhand: Nothing can beat a dishwasher, stove, sink, pot rack, pantry door, and four cabinet units used for $435. Just ask Frugal Babe about that deal.

11. Spruce up the siding [PDF]: Siding replacement hangs in right up there with kitchen and bath remodeling for home sale ROI (return on investment). If all you need is new siding to make your home stand out for sale, then go for it. Otherwise, just spend the money on a power wash to make that home seem like new.

12. Don't overspend: Don't run up those credit cards to overspend on a home to make it the best in the neighborhood. Buyers will not overspend on you, so why should you overspend on them?

13. Be frugal: You can have every thing you need to fix up that home for sale if you're frugal. If frugality is a new lifestyle for you, check out frugal Web sites such as this one to learn how to ready your home for sale for mere pennies.

Check out the full list here.


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