Real Estate and Net Worth: How to Accurately Track Your Home Equity

For most Americans, their home is their single largest asset. Yet many people either overestimate or underestimate its contribution to their net worth. Let's fix that.

What Is Home Equity?

Home equity is simple math:

Home Equity = Current Market Value − Remaining Mortgage Balance

If your home is worth $400,000 and you owe $280,000 on your mortgage, your home equity is $120,000. That $120,000 is what goes into your net worth calculation — not the full $400,000.

The Two Numbers You Need

1. Current Market Value

This is the trickier number. Your home's value isn't what you paid for it or what an online estimate says (though online valuation tools are a reasonable starting point). Here are your options, from least to most accurate:

• Online estimates (Redfin, Realtor.com, etc.) — Free, instant, but can be off by 5-15%. Good for monthly tracking.
• Comparative market analysis (CMA) — Ask a local real estate agent. Free, more accurate, but you'll get marketing calls.
• Professional appraisal — $300-500, most accurate. Necessary for refinancing but overkill for regular net worth tracking.
• Automated valuation models (AVMs) — Services like ATTOM Data provide data-driven estimates. Some net worth trackers (including Nova) integrate these for automatic updates.

Our recommendation: Use online estimates for monthly tracking and get a professional opinion annually if your property is a large portion of your net worth.

2. Remaining Mortgage Balance

This one's easy. Check your mortgage statement or log into your lender's portal. The number you want is the principal balance — not the total payoff amount (which may include prepaid interest and fees).

Rental Properties and Investment Real Estate

If you own rental property, the same equity formula applies. But there are additional considerations:

• Each property should be tracked separately in your net worth
• Include rental income in your cash flow analysis, but not directly in net worth
• Maintenance reserves — Having $10k set aside for repairs is an asset; that money is part of your net worth
• Depreciation — For tax purposes, you depreciate rental properties. But for net worth purposes, use the actual market value, not the depreciated book value

Common Mistakes

Counting the Full Home Value

Your net worth doesn't include the full value of your home — only your equity. If your house is worth $500k but you owe $450k, your home contributes just $50k to your net worth, not $500k.

Ignoring Selling Costs

If you sold your home today, you'd lose roughly 8-10% to agent commissions, closing costs, and transfer taxes. Some financial planners argue you should subtract these from your equity for a more conservative net worth. This is a personal choice — just be consistent.

Not Updating Regularly

Home values change. Markets shift. Your mortgage balance drops with every payment. Update your real estate values at least quarterly — or use a tracker with automatic property revaluations so you never fall behind.

Forgetting About HELOCs and Second Mortgages

If you have a home equity line of credit (HELOC) or second mortgage, those balances reduce your equity. Make sure they're included as liabilities.

How Real Estate Fits Into Your Total Picture

Real estate is typically an illiquid asset — you can't easily convert it to cash like stocks or savings. When evaluating your net worth, it's helpful to know:

• Liquid net worth — Cash, stocks, bonds, and other easily accessible assets
• Total net worth — Everything including real estate, vehicles, and other illiquid assets

Both numbers are useful. Your liquid net worth tells you what's available in an emergency. Your total net worth shows your complete financial position.

Tracking It All Together

The challenge with real estate is that it exists in a completely different universe from your bank accounts and investment portfolios. Most banking apps don't track it. Most real estate sites don't track your other assets.

That's exactly the problem Nova solves. Explore Nova's features to see how it handles real estate — add your properties with estimated values, connect your mortgage accounts, and see your real estate equity alongside everything else. Bank accounts, retirement funds, investments, crypto, and more — all in one place, updated automatically.

Key Takeaways

1. Track equity, not value — Subtract your mortgage from your home's market value
2. Update regularly — At minimum quarterly, ideally monthly
3. Be realistic — Use conservative estimates rather than optimistic ones
4. Include all properties — Primary residence, rentals, land, everything
5. Remember it's illiquid — Know your liquid net worth separately

Your home is likely the biggest financial decision you've ever made. Make sure you're tracking it accurately.

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