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Two for One House Deal

At the beginning of the housing crash, sellers would advertise, "Buy our house, get the flat screen TV's!" Then, as the market deteriorated further, they touted, "Buy our house, and we'll throw in the car!" Now it's "Buy our house, get a second house too!" Such is the sad state of real estate in America today.

Source: townhousetoo.com

Scott and Michele Tivey bought their home in Ridgefield, CT to take advantage of the top-rate schools, the picturesque downtown, and the family-friendly atmosphere.

They settled in, had two kids, and didn't mind much that the housing market was falling around them, as they had no desire to leave.

When their son was diagnosed with autism, Michele quit her job as a lawyer to stay at home.

As the economy worsened, Scott was laid off from his job in IT at Time Inc. and began working as an independent consultant; they are still paying COBRA and looking at high health insurance costs down the road. A nearby town offered far better and less expensive services and therapies for their son, so they knew they had to move.

Source: townhousetoo.com

Talk about bad timing.

"So we thought what a great idea. We've got this asset, but we've got another down in Florida that we don't use as much. We could sweeten the pot," says Scott Tivey.

Scott owned a Palm Harbor, FL condo that he bought before he met Michele.

The property is in a gated community, but even aggressively priced properties there aren't selling.

While their Connecticut and Florida homes are now worth less than they paid, they still, unlike so many others, have a little equity left in both and are willing to take the loss just to liquidate.

"We know we're not going to make money, but at this point we're looking to liquidate the assets and break even." " -Trying to Sell Two Homes, Michelle Tivey

"We're not underwater on either one yet, thank God, but we're swimming like crazy," says Michelle.

The Tiveys already moved to their new community, and are renting, which is why selling is so imperative now. Their Connecticut home was originally listed at $459,000 and can still be bought alone, but for just $156,000 more you can get the Florida condo as well. Realtors priced the condo at $178,000, so together it's a deal.

"We know we're not going to make money, but at this point we're looking to liquidate the assets and break even," notes Scott.

And that's really the best most sellers can ask for in this market, no matter where you live. The overwhelming plague on the market is negative equity, when you owe more on your mortgage than your home is worth. 23.3 percent of borrowers are now in that predicament, according to new data out today from Zillow.com. With home prices falling for the 17th straight quarter, more homeowners who might like to move up are stuck swimming in place, underwater.

"Negative equity keeps people in their home, and it prevents the creation of a strong trade out market," says Zillow's CEO Spencer Rascoff.

"Because if you're upside-down in your home, it's very, very difficult to sell your home and then go buy a new home."

Even near-record low mortgage rates don't help the move-up buyer, if they can't sell their current home.

First-time buyers now make up about half of the market, but it's a small overall volume, given that so much first timer demand was pulled forward last year and in the first half of this year, thanks to the home buyer tax credit.

For sellers who can't slash prices any further, it is therefore time to get creative.

Source: townhousetoo.com

The Tiveys say they're already gotten more than a hundred hits on their website (www.townhousetoo.com) and will start doing showings on their Connecticut home next week.

They are marketing it themselves, choosing to "do crazy first."

The Florida condo was supposed to be a retirement home for Scott's parents in the long term and in the short term be a fun family place to relax. They were careful investors, not buying more than they could afford at the time and not using any "creative" mortgage products.

Apparently that doesn't matter anymore.

"We worked hard to have that second home in a warmer climate," says Michele. "We really wanted that lifestyle, but unfortunately with the economy the way it is, we can't support that right now."

Questions? Comments? RealtyCheck@cnbc.com And follow me on Twitter @Diana_Olick

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  • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.

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