TF you talking about? You use the whole price of the asset for net worth. If your mortgage is $1 less than what you would get from selling it that’s +$1 to your net worth.
If your house sells for 500k after expenses and you owe 300k you don’t just get the 200k and still owe 300k. The lein holder gets their 300k and you get 200k.
My house is worth ~1.8mm and I owe ~140k, that’s +1.66mm to my net worth. Even if I owed 1mm, I’d have +800k.
Unless the house is worth less than you owe, having a house with a mortgage isn’t a negative to your net worth.