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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, you should know the latest real estate terms. The real estate market is undergoing significant developments, and knowing what’s going on in the market can help you protect your investments and grow your portfolio. When you are negotiating with potential buyers or renters, being smart about what you know will help you make informed decisions. Knowing these six terms will help you stand out in today’s competitive market. Let’s review each one more closely.



iBuyers are real estate companies that utilize technology to provide speedy and smooth home-selling solutions. They offer an innovative and reliable way of selling residential properties in a few days, with little effort from the homeowners. iBuyers use complex procedures to assess real estate market data. This lets them make quick, competitive offers that depend on the current market conditions.


The first step in the iBuying process is for homeowners to post their property details to an iBuyer’s website. After that, the iBuyer assesses the property and, within 24-48 hours, makes an instant cash offer. If the offer is accepted, the homeowner can set a closing date and receive payment swiftly.


The fact that iBuyers makes the selling process easier is a big plus because it gets rid of steps that are hard to do, like staging, open houses, and negotiations. Homeowners can avoid the stress of getting their homes ready for showings and waiting months to sell their properties.


Days on Market (DOM)

Knowing the meanings of essential real estate terms is important when seeking a new property. One such term is “DOM,” which stands for “days on the market.” The number of days a property has been listed for sale is counted by this metric


The longer the property has been sitting on the market without any bids, the more frightening a high DOM might be. However, it’s important to note that seasonal changes in the real estate market might affect the DOM. As an example, houses usually sell quicker in spring than in winter. 


When you look at the average DOM for a certain place, you can tell if 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 is usually better for buyers because it may be easier for them to negotiate a better deal.


Real Estate Owned (REO)

An REO property stands for “Real Estate Owned,” which is a type of property that a lender owns after the previous owner has stopped making mortgage payments and the property has been foreclosed on. This usually happens when there are no buyers at the end of a foreclosure auction.


For investors, REO properties can be a good investment opportunity since they are able to purchase below market value. However, risks come with these kinds of sales because the property is sold “as-is.” Any necessary repairs or renovations will be the buyer’s obligation, and it can be hard to get funding.


FHA 203k rehab loan

The FHA 203k rehab loan is a loan program supported by the federal government. The goal of this program is to help homebuyers finance the purchase of a property that necessitates significant repair or upgrade.


The loan can fund repairs and renovations, including but not limited to structural enhancements, fixing plumbing and electrical issues, and installing new heating and cooling systems. It can also be used to make energy-efficient upgrades to older homes, including putting in new windows, doors, and insulation. 


The FHA 203k rehab loan can be useful because it allows buyers to finance the cost of the repairs and improvements into the mortgage, so they don’t need to pay for them out of their own cash. The loan can also be employed to purchase a property needing repair and refinance an existing property. 


Yet, you need to note that the loan won’t be used for “luxury” projects like constructing a swimming pool or other non-essential amenities. The loan is meant to help homeowners make essential repairs and renovate 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 employ to figure out how much of your monthly income goes toward paying debts. To find 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. This helps lenders figure out how much of your income can be put toward your mortgage and how much of your income is already going to pay off debts.


If your DTI is high, it might be hard to qualify for a loan, so it’s best to keep this number low. Mostly, lenders want borrowers to spend no more than 28% of their monthly income on housing payments and 36% or less on monthly debt payments. A low DTI makes it more likely that you will be able to get a loan or a mortgage.


It is important to remember that lenders may have slightly different methods to calculate DTI ratios based on the type of loan or mortgage you’re applying for. For example, some lenders may allow a higher DTI ratio for borrowers with outstanding credit scores.


It is better to keep your DTI ratio low if you want to maintain good financial health and find it easier to obtain financing when you need it. If you have trouble with a high DTI, you might want to pay off your debts, make more money, or talk to 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 referred to as a “good faith deposit.” This deposit proves the buyer’s seriousness and eagerness to purchase the property, which can encourage the seller to accept the offer. People usually get between 1% and 5% EMD, but this can change 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 goes through.


As a rental property owner, you need to know a lot of different real estate terms. Keeping up with the changes in the industry is important if you want to make smart decisions when negotiating with buyers or renters and secure your investments. Don’t forget that in a competitive market, having knowledge is a plus. 



If you’re interested in making real estate investments in Port Aransas and the nearby areas, Real Property Management Shoreline is here to help you accomplish financial freedom and make a passive income. Our professionals can help you with problems related to property management and real estate investments in a nice and knowledgeable way. Contact us online or call us at 361-885-0500.

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