The home equity formula
The basic formula has two parts:
Home equity = current market value minus total secured debt
Then, for a seller, a third step:
Net equity = home equity minus selling costs
Equity is often stated as a percentage, too. Divide your home equity by the market value. A house worth $200,000 with $120,000 owed has $80,000 of equity, or 40%.
The formula is simple. The hard part is getting honest numbers for each piece, so the steps below go one at a time.
Step 1: Estimate your home’s market value
Market value is what a buyer would pay today, not what you paid, what you’ve spent, or what the tax bill says. Ways to estimate it, from roughest to most reliable:
- Online estimates. Quick, but they can miss condition and updates.
- The county’s value. The Summit County Fiscal Office and other county auditors value property for taxes. That figure is set on a reappraisal schedule, so it can trail the market.
- Comparable sales. Recent sales of similar houses close by, adjusted for size, condition and updates. This is how agents and appraisers work.
- An appraisal. A licensed appraiser’s opinion, which costs money but gives you a number you can rely on.
Be realistic about condition. A dated kitchen, an old roof or a wet basement lowers value compared with updated houses nearby. Our guide on how much your house is worth explains each method.
Step 2: Add up everything secured by the house
List every debt that is recorded against the property, at its payoff amount, not the balance on your last statement:
| Debt | Where to find the number |
|---|---|
| First mortgage | Payoff statement from your servicer |
| Second mortgage or HELOC | Payoff statement from that lender |
| Solar loan secured by the house | The solar lender’s payoff |
| Judgment liens | The court record or the creditor |
| Unpaid property taxes | The county treasurer |
| Water or sewer bills certified to taxes | Your utility or the county |
| Federal or state tax liens | The IRS or Ohio Department of Taxation |
A payoff statement adds interest up to the payoff date and any fees, so it is a little higher than your statement balance. Federal Regulation Z requires a servicer to send one within seven business days of a written request; see how to get a mortgage payoff statement. If you aren’t sure what is recorded, our guide on checking for liens in Ohio shows where to look.
Step 3: Subtract selling costs for your net equity
Selling turns equity into cash, and the costs come out first. For an Ohio sale, list:
- Commission, if you list. Clever Real Estate’s August 2026 survey put the Ohio average at 5.65%.
- Conveyance fee, charged to the seller: $4 per $1,000 in Summit, Stark and Portage counties, and $3 per $1,000 in Medina.
- Title and settlement charges, as split in your contract.
- Prorated property taxes, a credit to the buyer because Ohio taxes are billed for the prior year.
- Repairs or buyer credits you agree to.
The full list is in seller closing costs in Ohio.
A worked example in Kent
Say you own a house in Kent, where the Census Bureau’s 2020-2024 estimate of median home value (owner estimate) is $219,900, and want to know what a sale would leave you:
| Step | Amount |
|---|---|
| Estimated market value | $230,000 |
| First mortgage payoff | minus $96,000 |
| HELOC payoff | minus $12,000 |
| Home equity | $122,000 (53%) |
| Commission at 5.65% | minus $12,995 |
| Conveyance fee at $4 per $1,000 (Portage) | minus $920 |
| Title, settlement and tax proration (example) | minus $3,800 |
| Net equity | about $104,300 |
The roughly $17,700 difference between home equity and net equity is the cost of the sale itself. Selling without a commission changes that gap more than any other single line.
Common mistakes when figuring equity
These errors make equity look larger than it is:
- Using your purchase price or a tax value instead of today’s market value.
- Using your statement balance instead of the payoff, which adds interest and fees.
- Forgetting a second lien, such as a HELOC with a balance you haven’t looked at in years, or a solar loan.
- Ignoring old liens. A judgment or certified water bill can sit on the record unnoticed until the title search.
- Leaving out selling costs, which on a listed Ohio sale often run several percent of the price once commission, the conveyance fee and title charges are added.
What your equity number tells you
Use the result to decide what’s realistic:
- High equity, no deadline: listing with an agent may net the most, even after commission.
- High equity, repairs needed: compare the cost and time of repairs with an as-is sale.
- Thin equity, under 10% or so: selling costs can use up most of it. Check every cost before you list.
- Negative equity: the sale needs cash at closing or a short sale. See selling a house worth less than you owe.
Remember that equity is not the same as taxable gain. Under IRS Publication 523, your gain depends on your sale price, selling expenses and basis, and most people selling a main home they have lived in for 2 of the last 5 years exclude up to $250,000 of it, or $500,000 if married filing jointly.
If you want a firm number to compare against your estimate, you can ask us for a written offer and we will show you how we arrived at it.
