How much Equity should I Have before Selling? By Eagle

So you’re thinking about selling your home and wondering how much equity you should have first? Different areas within Richmond and across Virginia require different answers because there exists no standard solution for this problem. The selection of the appropriate model depends on the specific project requirements which determine which model works best. That said, having more equity typically means you’ll walk away with more cash and have better options. The Eagle Cash Buyers guide explains home equity basics and shows readers how to determine their equity value before they list their home for sale. The article will present accurate cost information together with timing details and regional market data to help you choose the best time for your move.

What is Home Equity and Why Does It Matter?

Home equity is basically what you actually own of your house. The market value exists as the current worth of the property minus the remaining mortgage debt to the bank. Your Richmond home would fetch $300,000 on the market today while your mortgage balance stands at $220,000. Your equity equals the $80,000 difference. Your net amount would equal the total loan amount minus any other costs which exist before additional expenses come into play.

Why should you care? Well, strong equity opens doors. The process of home buying allows you to make a competitive offer on your ideal property while you focus on financing. Then you would be able to resolve your credit card debt once and for all. Your financial situation determines the outcome. You might experience the worst case scenario of having to pay money during the closing process to finalize your sale. My work with thousands of sellers has shown me that homeowners who check their equity every quarter learn when to sell their house immediately and when to wait for better market conditions.

How Can You Calculate Your Home’s Equity?

The math is straightforward, though getting accurate numbers takes some homework. Determine the probable market value of your property. You can check recent sales in your neighborhood or spring for a professional appraisal. Subtract your mortgage debt from your property value. Done.

Here’s a real-world example from a recent Richmond sale:

• AS IS value: $250,000
• Minus mortgage balance: $180,000
• Estimated repair costs: $15,000
• Agent fees & closing costs: $15,000
• Target profit: $40,000

The numbers show you need to build $70,000 in equity to reach your $40,000 profit goal after covering all repair costs and fees. Your price range goes past the $10,000 mark. The seller I worked with last month became shocked when she discovered her actual equity position fell short of her initial estimates. The Zillow estimate showed $320,000, but comparable sales suggested closer to $295,000. She had to change her entire selling timeline because of the $25,000 difference. You need a fast estimate so use NerdWallet’s home equity calculator to get an approximate value.

What Amount of Equity is Advisable Before Selling Your Home?

The conventional wisdom suggests having at least 15–20% equity before you sell. I believe this rule should function as a guideline rather than an absolute standard. This cushion usually means you can handle the various selling costs, and still have enough for a decent down payment on your next place (potentially dodging PMI in the process). The market in Virginia shows signs of unusual behavior. What works in Arlington might not fly in Roanoke. Sellers in Northern Virginia managed to sell their properties with only 10% equity because the market value of their homes increased so much. The market shows different levels of volatility so you should set your target at 10% in fast markets but 25% or more in slower markets like Southwest Virginia. You need to determine your exact position. Are you moving because of work? You need to move because of your job or you want to downsize for retirement. Different scenarios need different amounts of equity. Learning about Virginia home selling through research or professional discussions will benefit you.

• Cover your mortgage payoff (obviously).
• Handle those 5-6% agent commissions that somehow always feel higher than expected.
• Fix that leaky roof or outdated bathroom buyers will definitely notice.
• Secure a solid down payment for your next home.
• Keep some cash on hand for moving trucks and unexpected expenses.

Strategies to Increase Your Home Equity Before Selling

Your main goal should be to increase your home equity by following two different strategies which either raise your property value or lower your mortgage debt. The process appears to be straightforward.

The home improvement path requires you to select projects which deliver actual financial returns. A friend of mine spent $25,000 on a kitchen remodel and saw her home value jump by nearly $40,000. But another neighbor’s elaborate landscaping project barely moved the needle. The following home improvements tend to deliver the best returns based on my experience with recent sales: Kitchen improvements that focus on cabinets and countertops yield the highest returns. Bathroom renovations. Neutral paint colors applied to the property. The property gains value through exterior upgrades which include new siding and front door replacement. Energy-efficient upgrades in eco-conscious markets.

The debt side will not bring you pleasure when you use the additional $200 to pay down your principal each month. The extra payment will reduce your debt faster than you would expect. People choose to refinance when rates decrease but current market conditions with 7% rates make refinancing less attractive.

The trick is knowing your local buyers. The people of Norfolk seem to have an obsession with open floor plans and modern kitchen designs. Nail those, and you’ll likely be able to sell your home without the stress and possibly at a premium.

The Costs Associated With Selling Your Home and Equity’s Role

Here things start to get difficult. Your home will lose about 8-10% of its value during the selling process because you have to pay agent commissions and closing costs and repair expenses and staging costs.

Let me break down a typical $300,000 sale:
– Agent commissions: $18,000
– Closing costs: $3,000
– Pre-sale repairs: $5,000
– Moving expenses: $2,000
– Total: $28,000

Your equity needs to absorb all this, or you’ll be writing checks at closing. The experience is never enjoyable.

Some sellers sidestep certain costs by working with cash home buyers or similar investors. These buyers typically purchase homes as-is and can close in a week or two. The trade-off? You’ll probably accept 70-80% of market value. I recently worked with a couple who needed to relocate quickly for a job. The cash buyer route made them save about $25,000 in repair expenses and holding costs. Even with the lower price, they came out ahead because they didn’t have two mortgage payments for six months. The math you use depends on your personal circumstances.

When is the Best Time to Sell Based on Your Home’s Equity?

The timing process combines mathematical calculations with instinctual awareness. Your selling point should exist when your home equity value exceeds both the mortgage balance and all selling expenses while generating additional profit. But it’s not just about the numbers. Market conditions matter. Your equity value will increase rapidly if inventory levels drop while buyer demand stays strong. The real estate market in Virginia becomes more active during spring which produces 5-10% more transactions than the winter season. The market competition results in increased property prices.

Then again, if you’re facing a job transfer or family situation, perfect timing might be a luxury you can’t afford. I have assisted sellers through all possible circumstances. The right time to move sometimes happens when you need to move. The Richmond seller experienced a two-year wait before achieving the market conditions that he deemed perfect for his needs. She spent $15,000 on maintenance during that period while she lost the chance to get the job she wanted in Charlotte. Sometimes good enough equity is better than perfect equity that never comes.

Seller Checklist Before Listing

Your yard needs to have the sign before you check off these tasks:

• Run the numbers on your current equity (be honest about your home’s value).
• Check what similar homes are selling for in your area.
• Get realistic estimates for selling costs and what you’ll net.
• Tackle those repairs that’ll give you the best bang for your buck.
• Talk to a real estate agent who knows your neighborhood.
• Weigh traditional selling versus going the investor route.
• Consider your timeline and flexibility.

FAQs About Home Equity and Selling

1. Can I sell with less than 20% equity?
The process requires effort because it tends to become confusing. You will need to bring cash to the closing table when the sale price does not cover your mortgage balance and all closing expenses. Essentially paying to sell your own home. The market in Chesapeake suggests that waiting to accumulate more equity would be a wise decision. The quick sale to an investor represents the best option for you to sell your property rapidly although the price might not match your desired value. Sellers use seller credits and lender short sales to manage properties that have low equity.

2. How do market conditions impact equity?
Your equity will expand automatically when property values go up. Your equity grows without any additional effort on your part. The program gives away free money. The opposite also occurs. A cooling market can erode equity surprisingly fast. The housing market in Virginia experienced a 20-30% decline in certain regions during the 2008 financial crisis. Homeowners who previously had enough equity to own their homes now face the challenge of owing more than their property’s value. The present market operates under different circumstances yet home price variations follow the same basic principles. I recommend you check the recent home sales that occurred in your neighborhood. A local agent likely has more knowledge than you do so you should contact them every six months. Timing your sale properly depends on having good information.

3. Should I pay off my mortgage before selling?
Probably not worth it. Sellers typically remain under mortgage debt when they decide to list their property for sale. Your equity needs to be enough to pay off your mortgage debt and all selling expenses while providing extra funds for your upcoming phase. Unless you’re sitting on a pile of cash with nowhere better to put it, there’s usually no advantage to paying off the mortgage early just to sell. Your money would produce better results if you used it to make a down payment on your following property or placed it into different investments. The only exception occurs when you are close to paying off your high-interest debt from a second mortgage or HELOC because paying it off will increase your net proceeds.

Disclaimer: This information is for educational purposes only and is not legal or financial advice. Consult a licensed professional to get advice about your specific situation.