What is equity and why does it matter to wholesalers?
Equity is the property’s value minus what is owed on it. Wholesalers look for high-equity homes because the seller can accept a discounted price and still be paid off, which leaves room for a buyer and a fee.
A seller who owes more than the discounted price will need a short sale or cannot sell at that price. Estimated mortgage balances help screen leads before you spend time on them.
Estimates are not payoff statements. Confirm the actual balance with the seller or lender before relying on it.
Common mistakes
- Treating an estimated mortgage balance as the payoff.
- Forgetting second mortgages, liens and back taxes.
- Assuming high equity means the owner wants to sell.
More questions
How do I find a property’s equity?
Estimate the value and subtract the mortgage balances and liens. Estimates are a screen; confirm the payoff with the seller or lender.
What if the seller has little equity?
A discounted sale may not pay off the loan, so the deal may need a short sale, a novation or a different solution.
Does high equity mean a seller will sell?
No. It means a discounted sale is possible, not that the owner wants to sell. Motivation still decides.