Delaware Salesperson Pre-License Practice Exam 2025 – Your All-in-One Guide to Exam Success!

Question: 1 / 400

In real estate, what does the term 'equity' refer to?

The current value of a mortgage

The market value of a property

The difference between the market value of a property and the amount owed on it

In real estate, 'equity' refers to the difference between the market value of a property and the amount owed on it. This means that if you own a home valued at a certain amount, the equity is calculated by subtracting any outstanding mortgage or liens from that market value. Essentially, equity represents the ownership interest that a property owner has in their home.

For example, if a property is valued at $300,000 and the owner has a remaining mortgage balance of $200,000, the equity in the property is $100,000. This concept highlights the owner’s net worth in the property, reflecting how much of it is owned outright versus how much is financed.

Understanding equity is crucial for buyers and sellers alike, as it affects financing options, potential profit from a sale, and investment decisions. This is why choice C is the most accurate explanation of equity in the context of real estate.

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The cost of property taxes

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