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Essential Real Estate Terms to Know in a Competitive Market

Closeup of investor working at a laptop researching real estate terms. It is important for owners of rental properties to keep updated on the latest real estate terms. The real estate market is undergoing significant changes; keeping abreast of these changes can assist you with securing your investments and growing your portfolio. When negotiating with potential buyers or renters, keen awareness will enable you to make informed decisions. It is essential to have an in-depth awareness of the following six terms in a competitive market. Let’s examine each one in deeper detail.



iBuyers are real estate companies that provide expedient and trouble-free home-selling solutions through the use of technology. They offer an innovative and reliable way of selling residential properties within a week while requiring homeowners to exert minimal effort. iBuyers employs advanced systems to assess real estate market data, allowing them to come up with instant and competitive offers based on the current market conditions.


Homeowners typically complete the iBuying procedure by inputting their property details into an iBuyer’s website. The iBuyer will assess the property and provide an instant cash offer within 24-48 hours. The homeowner will be able to schedule a closing date and receive payment within a few days of the agreement being confirmed.


An enormous advantage of iBuyers is that they simplify the selling process by eliminating the need for staging, open houses, and negotiations. Homeowners can circumvent the anxiety associated with preparing their homes for showings and holding up months to sell their properties.


Days on Market (DOM)

When you’re in the market for a new property, comprehending essential real estate terms is a must. A term of this nature is “DOM,” which stands for “days on the market.” This metric monitors the number of days a property has been listed for sale. 


A high DOM could mean that the property has been listed on the market for a significant duration without getting any offers. Nevertheless, you must consider that seasonal changes in the real estate market can influence the DOM. For example, spring is when houses sell more quickly than winter. 


You can determine if the real estate market is robust (i.e., with a low average DOM) or feeble (i.e., with a high average DOM) by checking the average DOM for a specific location. Frequently, a weak market favors purchasers, who may discover it easier to negotiate a better deal.


Real Estate Owned (REO)

An REO property, which stands for “Real Estate Owned,” refers to a type of property that a lender owns after the past owner has failed to sustain mortgage payments and the property has been foreclosed on. Normally, this occurs when the property fails to be purchased at a foreclosure auction


As they have possibly been bought below market value, REO properties may present an attractive investment opportunity for investors. However, it is imperative to acknowledge that such transactions often entail risks since the property is being sold “as-is.” The buyer is liable for any necessary repairs or renovations, and financing can be difficult to acquire.


FHA 203k rehab loan

The FHA 203k rehab loan is a loan program backed by the federal government. It was created to help homebuyers to finance the purchase of a property that requires extensive repairs or renovations.


The loan can fund repairs and renovations, including but not limited to structural improvements, plumbing and electrical work, and the installation of new heating and cooling systems. In addition, it can be employed to make energy-efficient upgrades to older homes, like replacing new windows, doors, and insulation. 


A significant advantage of the FHA 203k rehab loan is that it allows buyers to finance the cost of the repairs and renovations into the mortgage, thereby eliminating the need to personally fund these costs with cash. Furthermore, the loan may be employed to purchase a property that needs repair and refinance an existing property. 


At any rate, it is critical to remember that the loan does not cover “luxury” renovations, including the installation of a swimming pool or other non-essential amenities. The loan is designed to assist homeowners with making extensive repairs and updates to their homes so they can live safely and comfortably in their properties. 


Debt to Income (DTI)

The DTI, or debt-to-income ratio, is a financial metric that lenders use to discover how much of your monthly income is assigned to paying debts. The DTI is calculated by adding your monthly mortgage or rent and other debt payments, dividing the total by your gross monthly income, and multiplying by 100. This calculation offers lenders insight into the proportion of your income that is currently allocated to paying off debts and how much mortgage you can bear.


A high DTI can make it difficult to qualify for a loan; therefore, it is prudent to keep this number low. Mostly, lenders prefer borrowers to spend something like 28% of their monthly income on housing payments and 36% or less on monthly debt payments. A lessened DTI increases the likelihood that an applicant will receive approval for a loan or a mortgage.


It is important to note that lenders’ criteria for assessing DTI ratios may vary marginally, contingent upon the specific loan or mortgage for which you are applying. For example, some lenders might permit a higher DTI ratio for borrowers with excellent credit scores.


No matter what, keeping your DTI ratio low is advisable for maintaining good financial health and making it simpler to obtain financing when essential. If you are experiencing difficulty managing a high DTI, you may want to consider reducing your debts, augmenting your income, or seeking advice from a financial professional


Earnest Money Deposit (EMD)

Earnest Money Deposit (EMD) is a deposit a buyer must make when offering a property. It is also called a “good faith deposit.” The seller may be more inclined to accept the offer if the buyer exhibits sincerity and enthusiasm in purchasing the property through the submission of this deposit. Commonly, the amount of EMD offered is between 1% and 5%, but this may vary depending on the market conditions and other factors. The EMD is held in escrow and is applied to the purchase price of the home if the deal is successful.


As a rental property owner, it is vital to learn different real estate terms. Keeping informed with the latest innovations in the industry can help you make wise decisions when negotiating with buyers or renters and protect your investments. Bear in mind that in a competitive market, knowledge matters greatly. 


Real Property Management Renowned is available to assist you in Gloucester and the surrounding area with real estate investments that generate passive income and lead to financial independence. Our experts can deliver competent and approachable advice on property management and real estate investment topics. Contact us online or call us at 410-442-6589.

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