Is your house 'upside down'? An 'upside down' house is one where the market value of the house is less than the mortage debt owed. Are you in a position where you must sell such a house? Consider this house selling tip.

First get an attorney and get some legal advice before you proceed any further. The attorney might tell you that you should try to negotiate a 'short sale' with the bank. A 'short sale' is one in which the difference between the market value of the house and the mortgage debt is forgiven by the mortgage lender. Here's an example.

Let's say you bought that dream home in 2004 for $600,000, the peak of the real estate market. Several years later the real estate market is a bust, your spouse just lost his or her job, that 'exotic mortgage' you used to purchase the house is about to reset to double your house payements. That dream home can't be sold for more than $500,000. The house is 'upside down' to the tune of $100,000.

You get an attorney and he advises you to negotiate a 'short sale' with the bank. You explain you're going into foreclosure, you can sell the house for $500,000 but you do not have $100,000 to hand over to the bank at the time of sale.

The bank might just forgive the $100,000 to avoid a foreclosure. If they won't then you explain to be bank that a foreclosure will cost the bank much more than $100,000 and you have no alterative.

Note this is not legal advise. Get an attorney and solicit legal advice before considering such a strategy.