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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. As an owner of rental properties, it is crucial to be informed of the latest real estate terms. The real estate market is changing dramatically, and being informed about these developments can help you protect your investments and grow your portfolio. When you are bargaining with potential buyers or renters, keen awareness will assist you in making informed decisions. In a competitive market, it is critical to understand the following six terms. Let’s take a deeper look at each one.



iBuyers are real estate companies that use technology to provide quick and hassle-free home-selling solutions. They offer an innovative and reliable way of selling residential properties in a matter of days, with minimal effort from the homeowners. iBuyers use sophisticated algorithms to analyze real estate market data, which allows them to make instant and competitive offers that are based on the current market conditions.


The iBuying method usually starts with homeowners transferring their property details to an iBuyer’s website. The iBuyer then assesses the property and makes an instant cash offer within 24-48 hours. If the offer goes through, the homeowner can arrange a closing date and get the money in a few days.


One of the major benefits of iBuyers is that they provide a straightforward selling procedure, removing the need for staging, open houses, and negotiations. Homeowners can prevent the agony of preparing their homes for showings and waiting months to sell their properties.


Days on Market (DOM)

Understanding key real estate terms is vital while looking for a new property. One such phrase is “DOM,” which is “days on the market.” This metric shows the number of days a property has been listed for sale. 


A high DOM might be an indicator of trouble, suggesting that the property has remained on the market for a prolonged amount of time without any bids. However, seasonal changes in the real estate market might impact the DOM. Homes, for instance, commonly sell faster in spring than in winter. 


By examining the average DOM for a particular spot, you may establish whether the real estate market is doing well (i.e., with a low average DOM) or poor (i.e., with a high average DOM). A weak market usually advantages buyers, who may find it easier to negotiate a better deal.


Real Estate Owned (REO)

An REO property, an abbreviation for “Real Estate Owned,” refers to a type of property that a lender owns after the previous owner has refused to fulfill their mortgage payments and the property has been foreclosed on. On average, this takes place when the property fails to sell at a foreclosure auction


For investors, REO properties can be a tempting investment opportunity because they are available to buy below market value. Yet, it is critical to take into account that these types of deals are frequently associated with risks because the property is sold “as-is.” Any necessary repairs or renovations will be the buyer’s obligation, and financing can be difficult to obtain.


FHA 203k rehab loan

The FHA 203k rehab loan is a loan program supported by the federal government. It is meant to help homebuyers to finance the purchase of a property that requires substantial repair or transformation.


The loan can fund repairs and renovations, such as structural improvements, plumbing and electrical repairs, and the installation of new heating and cooling systems. It additionally has the potential to make energy-efficient upgrades to existing houses, such as putting new windows, doors, and insulation. 


One of the main benefits of the FHA 203k rehab loan is that it allows buyers to finance the cost of the maintenance and improvements into the mortgage, which means they don’t have to pay for these expenses out of pocket. Moreover, the loan can be utilized to purchase a property needing repair and refinance an existing property. 


Yet, it is critical to highlight that the loan cannot be used for “luxury” modifications like constructing a swimming pool or other non-essential amenities. The loan was created to aid homeowners in making essential repairs and modifications to their homes so they could live safely and comfortably in their properties. 


Debt to Income (DTI)

The DTI, or debt-to-income ratio, is a financial metric utilized by lenders to estimate how much of your monthly income goes toward paying debts. DTI is computed by incorporating your monthly mortgage or rent and other debt payments, dividing the total by your gross monthly income, and multiplying by 100. The result of this evaluation tells lenders an idea of how much of your income is already dedicated to paying off debts and how much mortgage you can handle.


A high DTI can make it harder to qualify for a loan, so it’s imperative to keep this figure low. In general, lenders want borrowers to spend no more than 28% of their monthly income on housing payments and 36% or less on monthly debt payments. The smaller your DTI, the more likely you will be accepted for a loan or a mortgage.


It’s imperative to remember that lenders may have slightly different standards for considering DTI ratios based on the sort of loan or mortgage you’re asking for. For example, certain lenders may allow a greater DTI percentage for borrowers with good credit scores.


At any rate, maintaining your DTI ratio low is imperative for maintaining good financial health and making it easier to obtain financing when required. If you are suffering from a high DTI, try cutting down your debts, improving your income, or getting 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 referred to as a “good faith deposit.” This deposit indicates the buyer’s commitment and willingness to purchase the property, which could influence the seller to accept the offer. In general, the amount of EMD supplied ranges between 1% and 5%, but it can vary according to the market and the circumstances. If the agreement goes through, the EMD is held in escrow and applied to the purchase price of the home.


As a rental property owner, you must be acquainted with various real estate terms. Staying up to date on developments in the industry will help you make sound decisions when negotiating with buyers or renters and preserve your investments. Bear in mind that in a competitive market, information is power. 



Real Property Management Prosperity is willing to assist you in producing a passive income and achieving monetary independence through real estate investments in Newtown and the neighboring communities. Our professionals can provide competent and friendly assistance on property management and real estate investment issues. Contact us online or call us at 267-433-4200.

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