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If your home is worth less than your mortgage, the right agent can still help reduce the financial gap through smarter pricing, targeted marketing and stronger negotiation.
Home › Glossary › Negative Equity
Negative equity is most common when property prices fall, when a home is purchased at the peak of a cycle or when owners borrow heavily against their property. It means that if you sold today, the sale proceeds would not be enough to fully pay out your mortgage. This situation can limit your ability to refinance, upgrade or sell easily because you may need to contribute extra savings to clear the remaining loan balance. Many homeowners find negative equity emotionally stressful because it feels like being financially stuck, even if they continue making repayments. However, negative equity does not always last long. Markets can recover, loans can be paid down and strategic improvements can increase value. A skilled agent becomes particularly important because they can position the property carefully, attract the right buyers and negotiate hard to minimise the financial shortfall. With the right guidance, many sellers improve their outcome significantly even when starting from a negative equity position.
You bought your home for $720,000 with a high-LVR loan and still owe $690,000 on your mortgage. After a downturn in the local market, your property’s estimated value drops to around $650,000 which places you in negative equity. You need to sell due to a job relocation and feel uncertain about the financial impact. Your agent reviews comparable sales, helps you prepare the property to increase buyer appeal and launches a strong marketing campaign. Several interested buyers attend inspections and two make serious offers. After skilled negotiation, your agent secures a final sale price of $675,000 which significantly reduces the financial gap. Instead of owing tens of thousands at settlement, your shortfall becomes manageable and far lower than you feared.
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