KEEP AN EYE ON EQUITY!

   You’ve decided to sell your home, and your agent has suggested a price of $165,000. Your remaining mortgage balance is $114,000. The costs associated with selling and closing the transaction are $12,600. If all goes as planned your equity at closing will be approximately $38,400. Now – keep an eye on your equity.

   Several situations may arise during the sale process, which can reduce your equity substantially. The most common is a low purchase offer. If the offer is 4% less than your asking price, the price would be $158,400, or just $6,600 less than you expected. Or, is it?

   Keep in mind that the reduction in price comes straight off your equity. You had anticipated $38,400, which now becomes $31,800 – a whopping 18% less than expected. But wait, there’s another less obvious situation which can reduce your equity even more.

   Some buyers may off "full price" while asking that you pay their loan related closing costs. These costs are difficult to calculate. It’s easy to congratulate yourself for selling at full price. Ask your representative to explain the impact on your equity before accepting. If closing costs amount to 6%, your equity could drop to $28,500 – a full 25%+ reduction.

   Depend on your agent to provide a detailed accounting of your net proceeds from each offer. It could protect your valuable equity.