Learning Center · Method
How to Analyze Equity in PropStream
Equity is the single most important number in real estate investing. It answers the only question that matters before you spend a dollar on outreach: can this owner actually afford to sell at your price? PropStream surfaces estimated value, loan balances, and equity % on every property — here's how to read those numbers, filter by them, and avoid the deals that look good on paper but collapse at the closing table.
Equity first
Always the first filter — no equity, no deal
30%+
Standard floor for workable investor deals
AVM ±15%
Directional accuracy — verify with comps
Why equity comes first
Motivation without equity is a dead end. An owner in pre-foreclosure is highly motivated — but if they owe $280K on a property worth $250K, they cannot sell to you at any price that satisfies the bank. You can spend weeks negotiating, build rapport, and agree on terms, and it all collapses at the title company when the lien won't release. Equity is the capacity filter — without it, motivation, timing, and negotiation skill are irrelevant.
This is why equity is always the first filter in any stack. Before you filter by absentee status, ownership length, or recency — filter by equity. It eliminates every owner who mathematically cannot do a deal, regardless of how badly they want to sell. The remaining list is smaller, but every owner on it has the capacity to close.
The five equity tiers
TIER 1
Negative equity (underwater)
LTV > 100%
No standard deal possible. Owner owes more than the property is worth — the bank won't release the lien for less. Options: short sale (slow, uncertain) or move on. Filter these OUT of every list.
TIER 2
Low equity
0–20% equity
Tight. After paying off the loan and closing costs, there's little left for the owner. Possible if the owner is highly motivated and willing to walk away with nothing — but don't count on it.
TIER 3
Workable equity
20–40% equity
The standard investor range. Enough room for your offer, loan payoff, closing costs, and owner walkaway money. This is the floor for most deal types — filter 20%+ as your minimum on every list.
TIER 4
Strong equity
40–60% equity
Comfortable deal room. The owner can sell below market, you can cover repairs and holding costs, and everyone walks away with something. These deals close faster because the math works for both sides.
TIER 5
Deep equity
60%+ equity
Maximum flexibility. The owner can discount significantly and still net a large payout. You can offer creative terms (seller financing, lease option, subject-to) that don't work in lower-equity tiers. These are the deals other investors fight over.
How to read the equity panel in PropStream
Every property report in PropStream shows an equity summary. Here's what each number means — and what to verify:
SOURCE: PropStream AVM — algorithmic estimate based on comps and property characteristics.
ACTION: Verify against 3-5 recent sold comps within 0.5 miles. If the AVM is $300K and comps support $275-310K, you're in range. If comps suggest $220K, the AVM is inflated — use your number.
SOURCE: County recorder — the outstanding principal on the primary mortgage.
ACTION: Check for junior liens: second mortgage, HELOC, mechanic's liens. These don't always appear in the primary loan balance field. Look at the full lien history tab — any additional liens eat into your deal math.
SOURCE: Estimated value minus loan balance. PropStream calculates this automatically.
ACTION: This is gross equity — it doesn't account for closing costs (~2-3% of sale price), agent commissions if listed, or seller concessions. Net equity is always lower.
SOURCE: Equity $ divided by estimated value, expressed as a percentage.
ACTION: Use this as your filter criterion. But remember: a 30% equity property where the AVM is inflated by 15% might actually be at 15% real equity. The % is only as accurate as the AVM underneath it.
SOURCE: Loan balance divided by estimated value. The inverse of equity %.
ACTION: LTV under 70% = equity over 30%. Some investors prefer thinking in LTV because it directly answers 'how much does the bank own?' — an LTV of 50% means the bank owns half, the owner owns half.
The hidden equity killers
Junior liens
A second mortgage or HELOC sits behind the primary loan. PropStream's primary loan balance field may show $200K, but a $50K HELOC makes the real debt $250K. Always check the full lien history tab — if you see multiple recorded deeds of trust, there are multiple liens. Contact the county recorder to confirm payoff amounts before making an offer.
AVM inflation in hot markets
In markets where prices have risen 20%+ in a year, AVMs trend behind actual values. The opposite is also true — in declining markets, AVMs lag and overstate value. Cross-check the AVM against Zillow, Redfin, and your own comps. If three independent estimates cluster around a number and the AVM is the outlier, use the cluster.
Mechanic's liens and tax liens
A contractor who wasn't paid or a tax authority with a delinquent bill can file a lien that takes priority over the owner's equity. These liens survive the sale and become your problem. PropStream's lien tab surfaces tax liens; mechanic's liens appear in the property's recorded documents. Search for 'mechanic lien' or 'materialman lien' in the document history.
Reverse mortgage accrual
Senior owners with reverse mortgages have declining equity — the loan balance grows every month as interest accrues and the lender advances payments. A property that showed 40% equity 3 years ago may be underwater today. For senior-owner leads, check whether there's a reverse mortgage (HECM) on the property — it changes the equity math entirely.
Equity thresholds by deal type
Different deal structures need different equity levels. Match your equity filter to the type of offer you plan to make:
Where to go next
Equity analysis is the first filter in every stack. Learn how to stack lists to see how equity combines with occupancy, ownership length, and recency. Read the High Equity category hub for the full strategy on the deepest-equity leads. And explore Free & Clear Properties — owners with 100% equity and maximum deal flexibility.
Equity is the difference between a lead and a deal.
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PropStream pulls the estimated property value from its Automated Valuation Model (AVM), then subtracts the outstanding loan balance(s) from county recorder data. Equity = estimated value minus total loan balance. Equity % = equity divided by estimated value. The AVM uses recent sales comps, property characteristics, and market trends — it's directionally accurate but not an appraisal. Always verify against actual comps before making an offer, and check for junior liens (second mortgage, HELOC) that may not appear in the primary loan balance.
30%+ is the standard filter for most lead types. At 30% equity, a $300K property has $90K in equity — enough for an investor offer at 70% of ARV minus repairs, loan payoff, and owner walkaway. For distressed categories (pre-foreclosure, bankruptcy), you can drop to 20% — the motivation is higher and owners accept leaner deals. For high-competition categories (absentee, vacant), filter 40%+ — you need extra deal room to outbid other investors. For maximum flexibility (subject-to, lease options), filter 50%+ — deep equity unlocks creative deal structures.
AVMs are algorithmic estimates, not appraisals. They can be off by 10-15% in either direction, and they struggle with properties that are unusual for the neighborhood (much larger/smaller, heavily renovated, distressed condition). Before making an offer: pull 3-5 recent sold comps within 0.5 miles and 6 months, adjust for square footage and condition differences, and calculate your own ARV. If your ARV is significantly different from the AVM, use your number — but document why. The AVM is a starting point for filtering, not the final word on value.