Equity

Real estate equity is the difference between the worth and the amount owed on a piece of property. Worth can vary depending on the market. Everyone knows that the worth of anything is the amount a buyer is willing to pay and the amount a seller is willing to accept. Unfortunately, buyers often believe real estate is worth less than the seller is asking. Equally unfortunate, sellers often believe their property is worth more than any buyer is willing to pay. Real estate appraisers often settle the difference. An appraisal will determine the true market value of a piece of property. The difference between the amount owed and the appraisal would be the equity. It is hoped that the appraisal is more than the amount owed; sometimes it is not. In this case the property would be considered "under water" or "up-side-down." Neither of the two terms is favorable. In this case, there is no equity.