Equity is a homeowner's interest in a home. It represents the financial investment value to the owner. Regarding finances, equity can be calculated in numbers with black and white equations, and it can be quickly evaluated. Sweat equity is a little different, however, and it is important for every homeowner to understand the meaning of the term.
Sweat equity refers to the physical work put into the betterment of a piece of property. It is harder to calculate since its value can't be measured in numbers. If you took the time to remodel your bathroom, the chances are that you didn't clock your hours and save all of your receipts. Even if you did, it would not be measured as easily.
Most homeowners have more sweat equity in their properties than they realize. Instead of hiring someone to paint the house, homeowners do it themselves. Rather than hiring a contractor to build a shed in the backyard, many people will get a couple of friends together and get it done. If you've previously owned a home, you understand that this is part of owning a home.
Likely, time was spent doing the work intermittently and with less time-efficiency than what a bonded contractor might have spent. That is why the measurement is aesthetic rather than numerical. We're accounting in emotional rather than mathematical language. However, that doesn't mean that the time and effort won't pay off when you decide to sell your home.
You need to know this when you consider selling your property in the future. While you can't show receipts for a job done by a contractor, you can add the value of your hard work onto the value of the home you are selling. Showing potential homebuyers what you have done will definitely make a good impression.
