Seller Equity Importance?

[Tyler Scott]

Why exactly is it important for the seller to have a lot of equity? If someone has a $100K house that they still owe $90K on, why would it be less appealing to a wholesaler or flipper than someone who has 100% equity? I understand the mortgage is a lien on the property which must be paid before it can sell, but it' a little foggy why it is of importance. - T

[Steve Vaughan]

I've purchased at 90% of FMV before directly from the seller for long-term buy an holds with favorable financing already in place. Can't afford to put new financing on a 90% deal I keep let alone try and wholesale or flip it.

The seller having equity facilitates a transaction happening, but what's important to us as investors is the discount below FMV we buy at. Wholesalers and flippers need about 30%. I'm ok with much less at the buy because I think in 20 year horizons.

It takes about 10% to sell a property.  Buying at 90% will never work for a short-term operator.