How to estimate the equity in a NYC property before making an offer
The short answer
Equity is what the property would sell for minus everything secured against it: the open balance of each mortgage, tax and other liens, and in a foreclosure the interest, fees and arrears added to the debt. For any NYC lot, Hercules lists every recorded mortgage with its lender, amount and whether it is still open. The Pre-foreclosure Intelligence add-on shows the amount owed and estimated equity on each open NYC foreclosure case, and US and Long Island reports show an estimated balance and equity.
The calculation
- Estimate value from recent comparable sales, not the city's market value, which is a tax figure.
- List every open mortgage. A loan with no recorded satisfaction is still open.
- Estimate each open balance from the original amount, rate, term and age of the loan.
- Add tax liens, judgments and any other recorded liens.
- If there is a foreclosure, use the amount owed in the case, which includes interest and fees.
- Equity is the value minus the total.
| Example | Amount |
|---|---|
| Value from comparable sales | $1,200,000 |
| First mortgage, estimated open balance | $640,000 |
| Second mortgage | $90,000 |
| Unpaid water and sewer charges | $8,000 |
| Estimated equity | $462,000 |
An illustration, not a real property.
New York City loans are often consolidated with older ones, so several recorded mortgages may be one debt. Read consolidation agreements before you add balances together.
Questions
- Is the recorded mortgage amount what the owner owes?
- No. It is the original loan. The balance falls as the owner pays and can rise in a default. Where Hercules shows an estimated balance, it is an estimate, not a payoff figure.
- Why not use the city's market value?
- It is set for taxes and is often far below what a property sells for. Use comparable sales.
- What does the Pre-foreclosure Intelligence add-on add?
- The amount owed on each open NYC case, the default date, interest rate and daily accrual, and estimated equity. It comes with Distress, $299.99 a month.