Which of the following categories can equity in real estate fall into?

Equity in real estate is best understood as the difference between the property's current market value and any outstanding debts or liens secured against it. This means if you own a home worth $300,000 but still owe $200,000 on your mortgage, your equity would be $100,000. This concept is fundamental in real estate as it represents the owner's claim to the property after all liabilities are taken into account.

The other choices do not accurately define equity. Cash profits from selling real estate refer to the tangible profits after a sale, while the total investment in rental properties focuses on the amounts spent rather than the financial value after debts. The average market price of a home does not directly relate to an individual’s equity in a specific property, as it does not consider the debts associated with ownership. Thus, the initial selection as the correct answer embodies the true essence of equity in real estate.