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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. Knowing the latest real estate terms is very important for owners of rental properties. Knowing about the changes happening in the real estate market can help you protect your investments and grow your portfolio. When you are dealing with potential buyers or renters, being wise about what you know will help you make informed decisions. Knowing these six terms is important in a competitive market. Let us examine each one more closely.



iBuyers are real estate companies that use technology to ensure that home-selling solutions are quick and easy. They deliver an innovative and reliable way of selling residential properties in a matter of days, with little work required from the homeowners. It takes complex algorithms to look at real estate market data, which lets iBuyers make quick, competitive offers that are based on the present market conditions.


An iBuyer’s website is where homeowners enter their property details as part of the iBuying process. Following this, the iBuyer assesses the property and offers an instant cash offer within 24-48 hours. Within a few days of the offer being accepted, the homeowner can set a closing date and get paid.


iBuyers’ hassle-free sale process means you don’t have to worry about things like staging, open houses, and negotiations. Homeowners don’t have to worry about getting their homes ready for showings and waiting months to sell their properties.


Days on Market (DOM)

Knowing fundamental real estate terms is important when you’re looking for a new property. For example, “DOM” stands for “days on the market.” This metric indicates the number of days a property has been listed for sale. 


A high DOM can be a warning sign that the home has existed on the market for a long time without any offers. Additionally, the DOM can be affected by seasonal changes in the real estate market. Real estate, for instance, sells more quickly in the spring than in the winter. 


See if the real estate market is strong (i.e., with a low average DOM) or weak (i.e., with a high average DOM) by looking at the average DOM for a certain area. A weak market typically benefits buyers, who may find it easier 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 fails to make mortgage payments and the property has been forfeited. It usually happens when the house doesn’t sell at a foreclosure auction


For investors, REO properties can be a beneficial investment opportunity since they have the potential to be bought for below market value. Yet, it is critical to keep in mind that because the property is sold “as-is,” these sales often come with dangers. Any necessary repairs or renovations will be the buyer’s problem; it can be hard to get financing.


FHA 203k rehab loan

The FHA 203k rehab loan is a loan program backed by the federal government. Homebuyers can use it to finance the purchase of a property that needs a lot of fixes or renovations.


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. It can also be used to make energy-efficient upgrades to older homes, such as installing new windows, doors, and insulation. 


The main advantage of the FHA 203k rehab loan is that it allows buyers to finance the cost of the repairs and upgrades into the mortgage, so they don’t have to pay for these expenses out of their cash. In addition, the loan can be used to purchase a property needing repair and refinance an existing property. 


Notably, the loan is not meant for “luxury” improvements like developing a swimming pool or other non-essential amenities. The loan was created to help homeowners make important repairs and updates 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 that lenders use to verify how much of your monthly income goes toward paying debts. DTI is evaluated by combining your monthly mortgage or rent and other debt payments, dividing the total by your gross monthly income, and multiplying by 100. This computation gives lenders an idea of how much of your revenue is already dedicated to paying off debts and how much mortgage you can provide.


A high DTI can make it hard to qualify for a loan, so it’s paramount to keep this number low. Lenders usually want people to spend no more than 28% of their monthly income on housing payments and 36% or less on monthly debt payments. There is a greater chance that you will be accepted for a loan or a mortgage if your DTI is lower.


You need to bear in mind that lenders may have slightly different conditions for assessing DTI ratios, depending on the type of loan or mortgage you’re looking for. For example, some lenders may allow a higher DTI ratio for borrowers with excellent credit scores.


At any rate, keeping your DTI ratio low is a good idea for maintaining good financial health and making it less complicated to obtain financing when required. If you are having difficulty with a high DTI, think about paying down your debts, enhancing your revenue, 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 known as a “good faith deposit.” This deposit illustrates the buyer’s intent and keenness to purchase the property, which can inspire the seller to accept the offer. Offers of EMD are usually between 1% and 5%, but this can fluctuate depending on the market and the situation. The EMD is held in escrow and is applied to the purchase price of the home if the deal is successful.


Knowing different real estate terms is important if you are a rental property owner. Staying up to date with the latest industry changes can help you make informed decisions when negotiating with buyers or renters and secure your investments. Bear in mind that in a competitive market, knowledge is power. 

Real Property Management Pocatello is ready to help you produce a passive income and achieve financial freedom by investing in real estate investments in Chubbuck and adjacent regions. Our professionals can offer competent and approachable advice on property management and real estate investment matters. Contact us online or call us at 208-234-1000.

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