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Stupid question re equity in house

(16 Posts)
Whereisthesunshine Sun 24-Sep-17 12:45:27

Is the theoretical equity in a house the difference between purchase price and current value or outstanding mortgage and current value?

Let's say: purchase price 190000, valued 210000, outstanding mortgage 155000.

Sorry, I know this is a dim question blush

MirandaWest Sun 24-Sep-17 12:47:25

Equity is the difference between the outstanding mortgage and the market value. So if you had a house with a 100% mortgage then you'd have no equity in it.

Equity is what you'd get if you sold the property and paid back any outstanding mortgage on it.

BubblesBubblesBubbles Sun 24-Sep-17 12:47:48

Would be the house price now so 210-155 (the remaining mortgage) so 55k

Whereisthesunshine Sun 24-Sep-17 12:52:33

Thank you!

billybagpuss Sun 24-Sep-17 12:54:05

Yes so assuming you achieve the market valuation you have £55000 equity in your example. (I'd probably have the figure of £45000 in my head though to budget for fees and lower than hoped for offers.)

Whereisthesunshine Sun 24-Sep-17 12:57:58

I'm not sure whether to trust the estate agents' valuations though. How can they range from 200000 - 250000?

Florence16 Sun 24-Sep-17 13:07:11

Hats quite a big gap. Were they different agents? Ours was valued by EA1 at 255-260 and by EA2 at 250 if we didn't want to sell really fast. We sold within 3 days at 260k in the end.

billybagpuss Sun 24-Sep-17 13:10:13

That is quite a big gap, have you looked on rightmove to see what else is available for that money in your area.

Fannylodger Sun 24-Sep-17 13:10:22

Well, when you sell a house it's not like webuyanycar or something where there's a set value, it's based on that estate agents knowledge of the area and the market in that area. Also value can fluctuate a bit for example, 5 other similar houses in your street go up for sale. It can also vary if you want a faster sale. The lower you price it the faster you'll sell. If you price towards the top end of the amount it'll take longer - exactly how long depends on the market of your area. So no agent can go "yeah it'll sell for £235,600". You could get a firm offer quickly if you sell to those "instant house sale" places, but much like if you sold your car to webuyanycar or some such you'll get a lot less for it. Probably barely half of what it's actually worth. So stick with the agents however confusing it may be.

There's a wealth of advice out there for first time buyers not as much for first time sellers.

Fannylodger Sun 24-Sep-17 13:11:11

By the way, I am assuming you've had several valuations. Not just one. If it's just one that's a bit of a wide range.

MelvinThePenguin Sun 24-Sep-17 13:18:01

Were they all reputable, local agents?

We had a guy come round from one of the no commission places, who said our flat was worth X. Multiple local agents had told me it was worth X+£115k. When I told no commission man this, he looked at me like I was an idiot and said 'well, that's not what it says on Zoopla'.

We sold for X+£115k.

Whereisthesunshine Sun 24-Sep-17 13:40:28

Yes all reputable agents who sell houses in my area.

I don't even know whether I really want to sell. Bought STBXH out after he left me for OW just over a year ago. Have not really been feeling it lately. Am currently decorating throughout and am getting the garden sorted.

I have no substantial savings other than a cushion for repairs etc. so would need equity for new deposit.

waitingforlifetostart Sun 24-Sep-17 13:43:46

My house valuations were rediculous. Ranged from 70k to 96k. You expect a bit more of a gap when house prices are larger or if the house is unusual but this was a bog standard 3 bed terrace and plenty had sold nearby to give a better estimate.

MelvinThePenguin Sun 24-Sep-17 13:53:14

Moving house is an expensive business! I'd give it a bit of time, especially if you're decorating. A year isn't a long time to adjust to new circumstances.

Sorry for what you went through. Excellent work being in a position to buy STBXH out flowers

Whereisthesunshine Sun 24-Sep-17 14:00:56

You are right, Melvin. I might see how I feel in 6 months or so. The decorating will help sell it if I decide to and I like how fresh it looks now that I started to paint the hallway white.

MelvinThePenguin Sun 24-Sep-17 14:05:31

My whole house is slowly turning white, it is lovely and fresh. It was orange, silver, purple (think grape) and dark turquoise when we bought it confused.

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