Question Home Equity by Marilyn vos Savant
I grew up with the expression: Question Authority, but as the billboards around Sacramento seem to imply, today’s message is more along the lines of Question Everything. It’s not that people don’t always tell the truth; it’s much more complicated. In part, it’s whose perception of truth is the truth, and it’s also human error, among other things. The human error doesn’t always originate at the source. Let’s not even start talking about FOX News.
For example, when I enter a listing into MLS, I am not the person typing the data entry. An error could happen at that level. Ultimately, I am responsible for checking the contents of my listings; however, I also send the link for a new listing to my sellers so they can double check the information as well. You can never have too many eyes on a document to verify information.
However, I noticed this weekend an entry in the Ask Marilyn column by Marilyn vos Savant, whose claim to fame is a high IQ. It asked how co-owners of a home worth $200,000 with $10,000 in equity must divide the asset. Ms. vos Savant went into great depth explaining loan balances and various options available should an unpaid loan balance be higher or lower than market value, but she ignored the equity position entirely.
The fact is if a person has $10,000 in equity and a home is worth $200,000, that means the encumbrances are $190,000. It’s simple math. The equity is already computed and disclosed. The discussion should have been centered around how to divide the $10,000 of equity: $5,000 for you, $5,000 for me. If you want the house, you’ll give me $5,000. If I want it, I’ll you $5,000. If we plan to sell to a third party, we don’t have enough equity to pay a commission, so we’re hosed.
Which just goes to show that there are times you can’t even trust the words in front of your eyes. Something was missing in that column.