What is a Equity Sale

In real estate, and equity sale or traditional sale is the sale of a property in which the proceeds are higher than the loans and costs associated with the sale of the property. In other words, the seller of the property will receive proceeds once all obligations have been paid.

Mr. Seller offers his home for sale at $300,000.
Mr Seller currently has a mortgage of $100,000 left on his property and it will cost him roughly $20,000 to cover Escrow, Title and other closing costs associated with the sale of his property.
Mr. Seller will net $180,000 from the sale of his property ($300,000 – $120,000 (loan+closing costs) = $180,000)

Conversely, if Mr. Seller’s mortgage be $320,000, this would not be considered an equity sale and would be marketed as a short sale.

Equity sales or traditional sales are the most common type of sales in real estate with the exception of periods of significant home value decrease such as the housing market collapse of the late 2000’s in which short sales and foreclosures or REOs dominated the market.

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