For anyone you’ve helped in the past, odds are their equity has grown significantly over the last few years as home prices skyrocketed. Home equity builds over time and clients can easily overlook how much they’ve built up or what to do with it. According to the latest Equity Insights Report from CoreLogic, the average borrower with a home loan has almost $300,000 in equity right now.
As they weigh their options, especially in the face of inflation and talk of a recession, it’s important that they understand their assets and how they can leverage them. As a real estate professional, you are the best resource to help them understand how much home equity they have and advise them on some of the ways they can use it. Here are a few examples.
1. Does Their Home Still Fit Their Needs
If they no longer have the space they need, it might be time to move into a larger home. Or it’s possible they have too much space and need something smaller. No matter the situation, consider using their equity to power a move into a home that fits their changing lifestyle.
If they want to upgrade their house, they can put their equity toward a down payment on the home of their dreams. And if they’re planning to downsize, they may be surprised that their equity may cover some, if not all, of the cost of their next home. As a real estate advisor, you can help them figure out how much equity they have and how they can use it toward the purchase of their next home.
2. Reinvest in Their Current House
According to a recent survey from Point, 39% of homeowners would invest in home improvement projects if they chose to access their equity. This is a great option if they want to change some things about their living space but they aren’t ready to make a move just yet.
Home improvement projects allow them to customize their home to suit their needs and sense of style. Just remember to think ahead with any updates they make, as some renovations add more value to their home and are more likely to appeal to future buyers than others. For example, a report from the National Association of Realtors (NAR) shows refinishing or replacing wood flooring has a high-cost recovery. As a professional, they should lean on you for the best advice on which projects to invest in to get the greatest return on their investment when they sell.
3. Pursue Their Personal Goals
In addition to making a move or updating their house, home equity can also help them achieve the life goals they’ve dreamed of. That could mean investing in a new business venture, or rental property, retiring or downsizing, or funding an education. While they shouldn’t use their equity for unnecessary spending, leveraging it to start a business or putting it toward education costs can help them achieve other lifelong goals, and earn you a solid mark in their book and future references.
Keeping in touch with and reaching out to older clients is an essential part of any Realtor’s tool kit. Now is a great time to be a little more proactive in your outreach, and educate your clients on the type of power they have access too through their equity.