Equity spread
Equity spread is the gap between what a property is worth and what is owed against it.
It is a simple subtraction and it determines almost everything about what a distressed owner can do.
Why it decides the options#
With equity, a property can be sold during the redemption period. The redemption amount is satisfied from the proceeds and the balance belongs to the owner. That is a materially better outcome than letting the sheriff's certificate ripen, where the owner receives nothing.
It also supports a refinance, where credit allows, and it makes a redemption worth funding — because reclaiming a property worth more than the redemption amount recovers real value.
Without equity, all three routes close. Selling produces nothing after the debt. Refinancing is unavailable. Redeeming means paying more than the property is worth.
The connection to redemption behaviour#
This shows up directly in the Govire data.
Where the sheriff's sale bid was under 50 percent of value — meaning substantial equity remained — 58.1 percent of those windows ended in redemption, across 31 observations.
Where the bid was 80 percent or more of value, the rate was 20.0 percent across 50 observations.
Owners act when there is something to protect. That is not a surprising conclusion and it is worth having measured.
Bid-to-value was known for 158 of the 315 resolved windows, so those figures are stated on that subset rather than the whole.
Both sides of the subtraction are estimates#
Value. An appraisal is the strongest evidence. An automated model is a prior that cannot see condition. The assessor's estimated market value is a mass-valuation figure produced without an interior inspection.
Debt. Use a payoff quote, not a statement balance. A payoff adds interest accrued to the payoff date, fees, escrow deficiency and any prepayment penalty, and it carries a good-through date after which it grows.
The gap between a statement balance and an actual payoff is routinely thousands of dollars, and on a marginal sale it decides whether the seller leaves with money or brings money.
We do not publish a figure for this yet#
Worth stating plainly.
Govire publishes a redemption rate, time-to-outcome medians and survival curves, each with the number of observations behind them. There is no equivalent figure for equity spread across the tracked population, because the tables that would hold it are not currently populated.
Producing an estimate anyway would be easy and would be worse than the gap. A number with no computation behind it is indistinguishable from one with, right up until somebody relies on it.
The bid-to-value figures above are what the data does support, and they are stated with their denominator.