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The point of using the phrase sweat equity is to say that a property owner had to work really hard in order to raise the property value to the level where it is today.
It is not a result of passively riding on an upward real estate price trend.
Some of the activities a land owner might have done to raise the equity of the property might include:
- Gaining more easement rights and clawing back those that were given away
- Expanding zoning limitations
- Acquiring surrounding land to create a larger land parcel
- Building extensions and more rooms in the house
Owners who have sweat equity on a property might be emotionally attached to it.
So it might be tough to negotiate a low price for them to sell the property.