Definition of the term equity

Your home's equity is defined as the difference between your property's appraised value and the amount of any liens recorded against the title of your property.

As an example, let's say your home is appraised at $150,000 and you owe the bank $130,000 and you have no other liens on the property, then it amounts to $20,000.

When an investor buys a house, it is this figure that he looks at in order to make an offer. Therefore, when you sell your house, keep in mind that it may have this value in it that you may be able to sell.

This is a tricky situation, because you don't want to give this away but also you are under time constraints to get this done before the lender forecloses and you lose everything. Just make sure the investor doesn't take advantage of you. In many cases, just by letting the investor know you are knowledgeable about the value of your home is enough to keep him/her honest, but you may want to use the services of a lawyer in this situation to make sure you're not taken advantage of.

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