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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 stay informed of the latest real estate terms. Being aware of the substantial transformations occurring in the real estate market can assist you in protecting your investments and growing your portfolio. Having a keen awareness of the situation will enable you to negotiate with potential buyers or renters and make informed decisions. In a competitive market, knowledge of the following six terms is crucial. Let’s examine each one in greater detail.



iBuyers is a real estate company that offers streamlined and efficient home-selling solutions through technology. They provide an innovative and reliable way of selling residential properties within days, requiring the homeowners to exert minimal effort. By analyzing real estate market data with sophisticated algorithms, iBuyers is able to generate instant, competitive offers in accordance with current market conditions.


In the iBuying procedure, homeowners generally proceed by uploading their property details to an iBuyer’s website. The iBuyer then assesses the property and, within 24-48 hours, extends an instant cash offer. The homeowner can arrange a closing date and receive payment within a few days of the offer being accepted.


An important benefit provided by iBuyers is a streamlined selling process that obviates the necessity for staging, open houses, and negotiations. The anxiety associated with preparing their homes for showings and the months-long delay in selling their properties can be eliminated.


Days on Market (DOM)

When you’re in the market for a new property, understanding critical real estate terms is essential. One such term is “DOM,” which is “days on the market.” This metric tracks the number of days a property has been listed for sale. 


A high DOM may serve as an indicator that the property has been available for purchase on the market for a prolonged duration without any offers. However, it is critical to bear in mind that seasonal changes in the real estate market can affect the DOM. For illustration, spring is when homes sell at a higher rate than winter. 


By examining the average DOM for a particular region, you can ascertain whether the real estate market is strong (i.e., with a low average DOM) or weak (i.e., with a high average DOM). Generally, purchasers are in an advantageous position when the market is weak, as it may be simpler for them to negotiate a better deal.


Real Estate Owned (REO)

REO property, which stands for “Real Estate Owned,” refers to a type of property that a lender owns after the previous owner has failed to keep up with mortgage payments and the property has been foreclosed on. This occurs frequently when the property does not sell during a foreclosure auction


For investors, REO properties can be an appealing investment opportunity since they have the possibility of being acquired below market value. Despite this, it is critical to note that these transactions frequently involve risks due to the fact that the property is sold “as-is.” Any necessary repairs or renovations will be the buyer’s liability, and financing can be complicated to obtain.


FHA 203k rehab loan

The FHA 203k rehab loan is a loan program assisted by the federal government. It enables prospective homebuyers to finance the purchase of a property that requires substantial renovations or repairs.


The loan can fund repairs and renovations, like structural developments, plumbing and electrical fixes, and the installation of new heating and cooling systems. Additionally, it can be utilized to make energy-efficient upgrades to older homes, including installing new windows, doors, and insulation. 


A primary benefit of the FHA 203k rehab loan is that it allows buyers to finance the cost of the repairs and renovations into the mortgage, meaning they don’t have to pay for these expenses out of pocket. Furthermore, the loan can be used to purchase a property needing repair and refinance an existing property. 


Nonetheless, it is critical to note that the loan is not designated for “luxury” improvements like the installation of a swimming pool or other non-essential amenities. The objective of the loan is to assist homeowners in making necessary fixes and updates to their homes so they can live safely and comfortably in their properties. 


Debt to Income (DTI)

Lenders utilize the DTI, or debt-to-income ratio, as a financial metric to ascertain the proportion of one’s monthly income allocated to paying debts. DTI is determined by adding your monthly mortgage or rent and other debt payments, dividing the total by your gross monthly income, and multiplying by 100. This computation provides lenders with an understanding of the proportion of your income that is currently allocated to paying off debts and how much mortgage you can afford.


A high DTI can make it difficult to qualify for a loan, so it’s imperative to keep this number low. Mostly, lenders desire borrowers to spend no more than 28% of their monthly income on housing payments and 36% or less on monthly debt payments. The likelihood that you will be approved for a loan or a mortgage increases with a lower DTI.


It’s important to mention that the manner in which lenders assess DTI ratios may vary marginally, depending on the specific loan or mortgage for which one is applying. For example, borrowers with outstanding credit scores may be eligible for a higher DTI ratio from certain lenders.


In any case, sustaining a low DTI ratio is essential for maintaining good financial health and making it easier to obtain financing when required. If you are struggling with a high DTI, consider paying down your debts, increasing 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. An alternative term for this is “good faith deposit.” This deposit could entice the seller to accept the offer by demonstrating the buyer’s intent and urgency to purchase the property. The quantity of EMD offered typically ranges from 1% to 5%, but this can fluctuate depending on the market and the conditions. The EMD is held in escrow and, if the transaction goes forward, is applied to the purchase price of the home.


It’s crucial for a rental property owner to possess knowledge of a wide range of real estate terms. Staying up to date with the latest industry fluctuations can help you make wise judgments when negotiating with buyers or renters and preserve your investments. Know that knowledge is power in a competitive market



Real Property Management First Choice is prepared to provide assistance in establishing financial independence and generating passive income via real estate investments in Springdale and the adjacent regions. Regarding our property management and real estate investment, our experts are able to provide knowledgeable and accessible counsel. Contact us online or call us at 479-242-0791.

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