Sweat Equity is a term used to describe the increased appraisal value as a result of home improvements done by the homeowner. In theory, improvements increase a property’s desirability. By adding value to a home, the appraised selling price increases and therefore the equity, through the homeowners’ own efforts, or “sweat”
Typical sweat equity projects on the exterior of a home that can raise the actual value and “curb appeal” for a house are, landscaping and water features, or adding exterior decks, fences, or walkways. Interior projects that usually increase the value of a home are minor kitchen and bathroom remodels, or adding tile flooring.
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Often, projects attempted by homeowners lacking experience and proper tools may add a perceived value but decrease the desirability of a home due to shoddy workmanship.
Simply, “sweat equity” means that the homeowner does the labor. Most often sweat equity projects involve “cosmetic” applications as opposed to major construction.