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Sweat Equity

By on January 31, 2019

Sweat equity is a term used to describe appreciation of property value as a result of an owner’s hard work that might include conducting renovations and remodeling works himself.

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.

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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
  • etc

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.



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