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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. If you’re an owner of rental properties, it’s crucial to have knowledge of the latest real estate terms. Having an awareness of the changes happening in the real estate market can help you secure your investments and grow your portfolio. You can utilize your astute awareness to make informed decisions while negotiating with potential buyers or renters. Knowing the details of these six concepts will provide you with an advantage in today’s competitive market. Let’s review each one more closely.



iBuyers are real estate companies that utilize advanced technology to provide quick and simple home-selling solutions. They offer an innovative and reliable way of selling residential properties swiftly, requiring minimal exertion from the homeowners. iBuyers use advanced procedures to analyze real estate market data, enabling them to make quick and competitive offers that align with the present market conditions.


Homeowners start the iBuying procedures by uploading their property details on the iBuyer’s website. The iBuyer will next assess the property and make an instant cash offer within 24-48 hours. Once the homeowner‘s offer is approved, they can set a closing date and anticipate receiving payment within a week.


The selling process of iBuyers eliminates time-consuming tasks such as staging, open houses, and engaging in negotiations. Homeowners can just schedule showings instead of worrying about making repairs and waiting months to sell their properties. 


Days on Market (DOM)

If you’re looking for a new property, acquainting yourself with basic real estate terms is essential. One such term is “DOM,” which is “days on the market.” This metric calculates the number of days a property has been listed for sale. 


A high DOM may indicate a problem, demonstrating that the property has been unsold on the market for a significant period without any offers. However, it’s critical to remember that seasonal changes in the real estate market may influence the DOM. As an illustration, homes usually sell faster in spring compared to winter. 


The strength (i.e., with a low average DOM) or weakness (i.e., with a high average DOM) of an area’s real estate market can be assessed by examining the average DOM for that region. Buyers can often benefit from a weak market, as it may provide them with more opportunities to negotiate a better deal.


Real Estate Owned (REO)

An REO property, short for “Real Estate Owned,” refers to a type of property that a lender owns after the previous owner has been unable to maintain mortgage payments, resulting in foreclosure. Typically, this takes place when the property is unsuccessful in selling at a foreclosure auction


Investors may find REO properties to be an advantageous investment opportunity as they can potentially be bought at below-market value. However, it is important to mention that these kinds of sales are commonly linked to risks due to the fact that the property is sold “as-is.” The responsibility for covering the costs of any necessary repairs or renovations falls on the buyer, and obtaining a loan can pose challenges.


FHA 203k rehab loan

The FHA 203k rehab loan is a loan program financed by the federal government. It is supposed to help homebuyers to finance the purchase of a property that needs substantial fixes or improvements.


The loan can fund repairs and renovations, including but not limited to enhancements to the structure, maintenance of plumbing and electrical systems, and the installation of new heating and cooling systems. Additionally, it has the potential to be utilized for the purpose of insulating and changing windows and doors in older homes, thereby facilitating energy-efficient upgrades


The FHA 203k rehab loan is advantageous because it allows buyers to finance the cost of the repairs and enhancements to the mortgage, eliminating the requirement for upfront payment from the buyer. Furthermore, the loan can be utilized to purchase a property needing repair and refinance an existing property. 


However, it is important to keep in mind that the loan cannot be used for “luxurious” improvements like building a swimming pool or other non-essential amenities. The loan is intended to help homeowners make essential repairs and updates to their homes to 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 determine how much of your monthly income goes toward paying debts. To figure out your DTI, sum up your monthly mortgage or rent and other debt payments, divide the total by your gross monthly income, and multiply by 100. Lenders can utilize this figure to determine how much of your income already goes toward paying off debts and how much mortgage you can afford.


Qualifying for a loan can be challenging if your DTI is high. Therefore, it’s crucial to maintain this number low. Mostly, lenders prefer borrowers to spend no more than 28% of their monthly income on housing payments and 36% or less on monthly debt payments. Having a lower DTI increases your likelihood of a loan or a mortgage approval.


It’s important to mention that the standards lenders use to determine DTI ratios may differ slightly depending on the specific loan or mortgage you’re applying for. For instance, certain lenders might permit a higher DTI percentage for borrowers with good credit scores.


Maintaining a reasonable DTI ratio is crucial for maintaining good financial health and making it easier to obtain financing when required. If you are struggling with a high DTI, you have the choice to pay off debts, increase your income, or seek advice from a financial professional.


Earnest Money Deposit (EMD)

Earnest Money Deposit (EMD) is a deposit a buyer must make when offering a property. This can also referred to as a “good faith deposit.” Including the deposit can increase the likelihood that the seller may accept an offer, as it indicates the buyer’s genuine interest in purchasing the property. Usually, the amount of EMD provided is between 1% and 5%, although it could differ based on the market and the circumstances. If the deal is successful, the EMD is held in escrow and is applied to the purchase price of the home.


Having a solid understanding of the real estate terms is essential for a rental property owner. Staying updated on industry developments is crucial if you want to make informed decisions when negotiating with buyers or renters and protect your investments. Keep in mind that in a competitive market, knowledge is important. 


Purchasing properties in Pinecrest and its nearby area can assist you in establishing a source of passive income and achieving your financial independence objectives. Real Property Management Genesis is available to help you. If you are seeking guidance on property management or real estate investments, our team of professionals can provide knowledgeable and approachable advice. Contact us online or call us at 786-744-5700.

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