House. Equity. Choice – The HouseAmp Proposition
A guest article by Walter Allen, President| HouseAmp.
Residential Real Estate is the largest asset class in the world. In the US alone, residential real estate is valued at a staggering $40 trillion. While it is understood that the housing market is a bellwether for the entire economy, it is rarely mentioned that Americans have about $22 trillion in home equity and owe about $18 trillion in mortgage debt.
For many families, their home equity constitutes the bulk of their net-worth. Home equity, however, does not imply liquidity or the availability of cash; often, the ability to tap into one’s home equity is constrained by stringent financial requirements, income to debt ratios, and a host of other factors.
This can lead to difficulty for many people who have wealth caught up in their homes but little cash. For people who are interested in selling their houses to avail of the equity (or for other reasons), another difficulty arises. This difficulty can be turned into an opportunity under the right circumstances and with the right partners.
Put simply, many houses would sell for substantially more money if they were refurbished before sale. The increase in sale amount in many cases far exceeds the amount of money used for refurbishment. The key is to determine which elements of the house to change- to drive the most ROI- and to be able to arrange the liquidity to get the refurbishments done.
Many people struggle at this point. They have money locked in their home equity and are looking to maximize their returns but don’t have the cash on hand or wherewithal to make the right changes in order to derive the most gain upon sale.
Estimates are that millions of people are in this circumstance every year. As such, the scale of the opportunity is great, matched fully by the need in the marketplace for a solution. This creates a crossover between an economically productive set of services and a set of services built on the notion of fairness, equity, and homeowner value in the overall housing ecosystem.
Providing early and timely liquidity to home-sellers such that they can upgrade their homes, sell for a high multiplier of investment, and then enjoy the benefits of increased equity while only settling with the liquidity provider “later” is thus an important part of the fertile housing transaction ecosystem.
Doing this while providing ease, speed, and security is gravy on top.
We are moved every day by the stories of people whose lives are altered by the services we make available. Both the opportunity and the gratification are monumental.