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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 advisable to stay updated on the latest real estate terms. The real estate market is undergoing significant changes, and being familiar with these changes can help you protect your investments and grow your portfolio. Astute understanding will help you make informed decisions when bargaining with potential buyers or renters. Knowing these six terms will give you a significant advantage in today’s competitive market. This post will examine each one separately.



iBuyers are real estate companies that use cutting-edge methods to provide fast and accessible home-selling solutions. They provide an innovative and reliable way of selling residential properties in a couple of days, with minimal work from the homeowners. iBuyers use complex procedures to analyze real estate market data, which allows them to make quick and competitive offers depending on the present market conditions.


Homeowners start the iBuying transaction by entering their property details into an iBuyer’s website. After assessing the property, iBuyer provides an instant cash offer within 24-48 hours. If the offer has been granted, the homeowner can schedule a closing date and receive payment within a week.


iBuyers streamlined selling method is an additional advantage because it does away with tedious duties like staging, open houses, and negotiations. Homeowners can evade the worry of preparing their homes for showings and waiting months to sell their properties.


Days on Market (DOM)

When searching for a new property, knowing important real estate terms is essential. One such term is “DOM,” which is “days on the market.” This metric monitors the number of days a property has been listed for sale. 


A high DOM can be an early indication that the property was sitting on the market for too long without receiving any offers. It should be noted, however, that seasonal changes in the real estate market can affect the DOM. For example, homes typically sell quicker in spring than in winter. 


By looking at the average DOM for a certain location, you can identify whether the real estate market is strong (i.e., with a low average DOM) or weak (i.e., with a high average DOM). A weak market often benefits buyers, who may find it more uncomplicated 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 prior owner defaulted on the mortgage payments and the property has been foreclosed on. This commonly happens when the property fails to sell at a foreclosure auction


Since REO properties can be purchased below market value, they present a compelling investment opportunity for savvy investors. However, it is worth noting that because the property is being sold “as-is,” there is always a chance of something going wrong. The buyer will be liable for paying for any necessary repairs or renovations that are required, and financing can be challenging to come by.


FHA 203k rehab loan

The FHA 203k rehab loan is a loan program backed by the federal government. It’s made for homebuyers who want to finance the purchase of a property but can’t afford to pay cash because it needs a lot of work.


The loan can fund repairs and renovations, including but not limited to structural improvements, plumbing and electrical repairs, and the installation of new heating and cooling systems. New windows, doors, and insulation are just a few examples of the kinds of energy-efficient upgrades that can be made to older homes using this money. 


The FHA 203k rehab loan is advantageous since it allows buyers to finance the cost of the repairs and modifications into the mortgage rather than paying for them out of pocket. Furthermore, the loan can be utilized to purchase a property needing repair and refinance an existing property. 


Nevertheless, you need to keep in mind that the loan does not qualify for “luxury” enhancements like constructing a swimming pool or other non-essential amenities. The loan can be used 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 know the amount of your monthly income that goes toward paying debts. 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. Lenders can utilize this figure to determine how much of your income is already committed to paying off debts and how much mortgage you can manage.


A high DTI can make it challenging to qualify for a loan, so it’s essential to keep this number low. Generally, lenders prefer borrowers to spend no more than 28% of their monthly income on housing payments and 36% or less on monthly debt payments. The lower your DTI, the more likely you will be approved for a loan or a mortgage.


Remember that the requirements that lenders utilize to calculate DTI ratios might vary slightly depending on the type of loan or mortgage you’re asking for. For instance, some lenders may allow a higher DTI ratio for borrowers with stellar credit scores.


In any case, keeping your DTI ratio low is vital for maintaining good financial health and making it more uncomplicated to obtain financing if necessary. Paying off debt, earning additional revenue, or consulting a financial professional are all options if your DTI ratio is high and you’re having trouble managing. 


Earnest Money Deposit (EMD)

Earnest Money Deposit (EMD) is a deposit a buyer must make when offering a property. You can also call it a “good faith deposit.” This deposit attests to the buyer’s sincerity and willingness to purchase the property, which can push the seller to accept the offer. The percentage of EMD offered can vary depending on the market and the specifics of the scenario, but it is often between 1% and 5%. The EMD is held in escrow and credited toward the purchase price of the home if the sale goes through.


As a rental property owner, you need to learn various real estate terms. Staying conversant with the present industry fluctuations can help you make well-versed decisions when negotiating with buyers or renters and safeguard your holdings. Bear in mind that in a competitive market, knowledge is power. 



Real Property Management Hampton Roads is prepared to assist you with producing a passive income and achieving financial freedom through real estate investments in Suffolk and the surrounding area. When it comes to property management and real estate investment, our experts can provide sound advice. Contact us online or call us at 757-395-4274.

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