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What does an underwater property mean?

Posted by: raindrop 6 years, 1 month ago

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An underwater property is a slang term for a home that does not have any equity.  

In other words, there are liens against the property that add up to more than the current market value.  In real estate, equity is a term used to describe the difference between the market value of your home and any liens against the home (like a mortgage).  Another way to think about equity is if you were to sell your home, any money you would have left after paying off all of the liens and closing costs.

If a homeowner were to try to sell their "underwater" property, they would either have to pay the difference between the sales price and the total liens, or they would have to seek a short sale.  In real estate, a short sale is a transaction where the sales price is less than the liens against the property plus the closing costs.  A short sale requires bank approval and is often a step used by homeowners to avoid foreclosure.

For more information about short sales, underwater mortgages, Coronado foreclosures, or the current market conditions, contact Kate!

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