Equity at close is not money

A house with an after-repair value of $240,000, bought and repaired for $196,000, shows $44,000 of equity at close. That figure is real and it is on the listing. It is also not $44,000.

What stands between it and your bank account

Selling costs, and they are larger than people carry in their heads:

• Agent commission, five to six percent, still the biggest line even where it has come down.
• Seller-paid closing costs, one to three percent depending on the state and on what the buyer asks for.
• Concessions, which are whatever the market is making sellers pay that year.
• Capital gains, on the gain, at whatever your situation makes it.

Nine percent of $240,000 is about $21,600. The $44,000 is nearer $22,000 before tax, and that is on a sale that goes smoothly.

Which is why we print both

Every Datum listing with an equity story shows the equity at close and the equity at the exit, and they are different numbers on purpose. The first is what you bought. The second is what you would keep.

The gap between them is not a criticism of the deal. It is the cost of converting a position into cash, and it applies to every property anybody has ever bought.

The case for not selling

The obvious one: you do not have to. Equity that stays in the house is not taxed and costs no commission, and it is borrowable against at rates a sale cannot match. A refinance takes some of it out at a cost measured in points rather than in tenths of the value.

Which is why the equity figure is worth reading as a measure of position rather than of profit. It tells you how much of this house is yours. What it is worth in cash depends entirely on how you get it out, and the listing shows you one of the ways.