Equity definition in RE

[Louise Whidby]

I don't understand the term Equity. Can someone please break it down in RE wholesaling terms. I looked up the definition and this is what I got..... The difference between the current market value of the property and the amount the owner still owes on the mortgage. It is the amount the owner would receive after selling a property.

[J Scott]

One distinction to keep in mind is that the equity you have in a property may not be the same as the amount you'd get out of the property if you sold it. That's because equity doesn't take into account the cost of selling.

For example, if a property were worth $100K and you owed $80K, your equity is $20K. But, if you actually sold the property, you'd incur realtor commissions, closing costs, and other fees that would eat into the equity and result in less cash at closing than the amount of equity you had.