Questions about Equity Spread

Many people have questions about equity spread (and what is considered a common equity spread).

Let me explain it to you this way. If you have a home that is subject-to and is leveraged pretty high, how much equity spread actually still makes it a deal? Before you can answer that, you need to ask how high-priced the home is; sure you can go off a list price. You can even see what other homes that are similar to this house may be going for. But it goes deeper than that.

Think about the house. Think about the neighborhood. Is it a nice house in a nice neighborhood that has nothing wrong with it which could stop it from being sold? Is there anything going on in the neighborhood or area that can decrease its’ worth? Don’t just look at the structure, but look at its surroundings as well.

If not, and if it is in a good, marketable area, then you have something to work with.
The biggest thing that people forget is that you do accept trades. You should always put in your ads that you will accept anything of value in trade.

Does this mean you might have to weed out the reality from the nonsense? Of course it does. You may get calls from people offering you motor homes and motorboats and other real estate. You just have to be up front with them. You need to let them know you are willing to take their house in on a trade. But you will have to be extremely careful. You will not be able to give one hundred percent of the value of the equity if you take the home on the trade. It is just not probable (or possible for that matter). Realistically, you will end up probably giving only half of their equity as credit.

So where does that leave you? You could potentially end up with their house (which could be easier to sell than your house) and in addition, you’ll get some built-in equity and make a profit from cashing out of your house at the same time. It is really that simple. Finding a motivated seller and a motivated buyer (that’s you!), and you’ll be on your way!