Equity
The portion of a property's value the owner actually owns — market value minus what's still owed against it.
Equity is the difference between what a property is worth and the debt secured against it. An owner with a home worth $300,000 and a $180,000 mortgage holds $120,000 in equity; an owner who owes more than the home is worth has negative equity, or is underwater.
Equity shapes which deal structures are even possible. High-equity owners can accept a cash discount and still walk away with money, while low-equity or underwater situations push deals toward creative structures like subject-to or seller financing, where the existing loan does the heavy lifting.
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