How do you sell a property with an upside down mortgage?

In order to sell a property with an upside down mortgage, you must be willing to pursue one of two options. The first option is to sell the home and pay the difference between the sales price and the balance on your mortgage out of pocket. You will lose a significant sum of money, so this is an option only if you can afford it. Another option may be to pursue a short sale. In this situation, the lender agrees to allow you to sell the home for less than the remaining mortgage balance, but you are not required to pay the difference. Short sales are subject to lender conditions.