By Jared Weggeland
Focus Realty Group, KW Lakeland
When I first heard the phrase, "no offers, no equity," I honestly didn't understand what it meant. You're selling your home, right. You don't have any equity because you haven't received an offer. Huh? This little story helped me understand better.
Joe was a rare bread in today's America. You see, Joe had lived in his home for over 20 years. (Most American's move every 6-8 years). Over time, Joe paid off the mortgage he obtained to buy his home. Joe made updates to his home over the years - a new kitchen, new flooring, an outdoor kitchen and sitting area. It was all very nice.
After about 15 years Joe realized that his last child was about to move out and he didn't really need a large, 5 bedroom home any longer. Still, he held on to the home for another 5 years - after all, the children had grown up there and he cherished fond memories made with his family in that place.
At year 20 Joe decided that he didn't want to maintain all of those rooms any longer so found a great Realtor and listed his home for sale.
The Realtor was very wise and explained to Joe that without offers, Joe had no equity. Joe didn't understand this. The Realtor explained:
"Joe, your house is worth between $320,000 and $330,000 based on recent sales on your street. You currently don't have a mortgage on the house, so you might be thinking that you have up to $330k in equity. That's not exactly the case. Your house is only really worth what a buyer is willing to pay you for it. You may get buyers willing to pay more than $330k, and you may only get buyers who are willing to pay up to $300k. Either way, you really don't have any equity until someone submits an offer to close on your house for a given price. Without an offer and a closing you don't have the money from the house to buy your next home. Therefore, no offers equals no equity. We need to create as many offers as possible. The more offers you receive, the higher the price that you will obtain and the highest amount of equity you will receive at closing. See what I mean?"
After I heard this is all became clear. Until you receive offers on your house, you have a whole lot of not much at all.
So, when you work with a Realtor, try to create the best value possible, the best looking opportunity to the buyers and Agents, and work to get as many offers as quickly as possible to maximize the number of offers obtained and ultimately to maximize the amount of equity, "cash money", you will receive at the closing table.