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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 vital to remain updated on the latest real estate terms. The real estate market is going through huge changes, and monitoring these progressions can assist you with protecting your investments and growing your portfolio. Astute awareness will help you to make informed decisions when you are haggling with potential buyers or renters. In a competitive market, being knowledgeable about the following six terms is crucial. Let’s take a closer look at each one.



iBuyers are real estate companies that use technology to give fast and hassle-free home-selling solutions. They offer an innovative and reliable way of selling residential properties fast, with minimal effort from the homeowners. iBuyers utilize complex algorithms to assess real estate market data, which permits them to make instant and competitive offers that are based on the current market conditions.


The iBuying process commonly entails homeowners entering their property details into an iBuyer’s website. The iBuyer then assesses the property and gives an instant cash offer within 24-48 hours. If the deal is accepted, the homeowner can set a closing date and receive payment in a couple of days.


One of the huge benefits of iBuyers is that they offer a less complicated selling process, disposing of the requirement for staging, open houses, and negotiations. Homeowners can avoid the stress of setting up their homes for showings and holding up months to sell their properties.


Days on Market (DOM)

When you’re in the market for a new property, understanding basic real estate terms is fundamental. 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 can be a warning, showing that the property has stayed available on the market for an extended period without any offers. Nevertheless, you need to keep in mind that seasonal changes in the real estate market can influence the DOM. For example, homes normally sell quicker in spring than in winter. 


By looking at the average DOM for a particular location, you can decide 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 frequently leans toward purchasers, who may find it more straightforward to negotiate a better deal.


Real Estate Owned (REO)

An REO property, another way to say “Real Estate Owned,” refers to a type of property that a lender owns after the past owner has failed to manage mortgage payments and the property has been foreclosed on. Normally, this happens when the property is unsuccessful at a foreclosure auction


For investors, REO properties can be an appealing investment opportunity since they have possibly been bought below market value. Notwithstanding, it is crucial to note that these sorts of deals frequently accompany risks since the property is sold “as-is.” Any necessary repairs or renovations will be the purchaser’s liability, and financing can be challenging to secure.


FHA 203k rehab loan

The FHA 203k rehab loan is a loan program upheld by the federal government. It is intended to permit homebuyers to finance the purchase of a property that needs a huge fix or renovation.


The loan can fund repairs and renovations, including but not limited to structural improvements, plumbing and electrical fixes, and the establishment of new heating and cooling systems. It can also be utilized to make energy-efficient upgrades to older homes, like putting in new windows, doors, and insulation. 


One of the vital benefits of the FHA 203k rehab loan is that it allows buyers to finance the cost of the fixes and improvements into the mortgage, meaning they don’t need to pay for these costs using cash on hand. Furthermore, the loan can be utilized to purchase a property needing repair and refinance a current property. 


In any case, it is important to keep in mind that the loan isn’t expected for “luxury” upgrades such as adding a swimming pool or other non-essential amenities. The loan is intended to assist homeowners with making fundamental fixes and updates to their homes so they can 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 how much of your monthly income goes toward 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 an idea of how much of your pay is already dedicated to paying off debts and how much mortgage you can afford.


A high DTI can make it hard to qualify for a loan, so keeping this number low is advisable. Mostly, lenders favor borrowers to spend something like 28% of their monthly income on housing payments and 36% or less on monthly debt payments. The lower your DTI, the more probable you will be endorsed for a loan or a mortgage.


You should keep in mind that lenders may have slightly different measures for evaluating DTI ratios based on the type of loan or mortgage you’re applying for. For example, some lenders might permit a higher DTI ratio for borrowers with great credit scores.


Regardless, keeping your DTI ratio low is vital for maintaining good financial health and making it simpler to obtain financing when required. If you are battling with a high DTI, think about settling your obligations, increasing your income, or looking for guidance 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 called a “good faith deposit.” This deposit demonstrates the purchaser’s earnestness and enthusiasm to purchase the property, which can encourage the seller to accept the offer. Commonly, the amount of EMD offered is between 1% and 5%, but it can fluctuate depending on the market and the circumstances. The EMD is held in escrow and is applied to the purchase price of the home if the deal is successful.


As a rental property owner, it is vital to be aware of different real estate terms. Staying up to date with the newest industry developments can assist you with pursuing informed choices when negotiating with buyers or renters and safeguard your investments. Keep in mind that in a competitive market, knowledge is important. 



Real Property Management Beacon is ready to assist you with generating a passive income and achieving financial freedom through real estate investments in Norwich and the surrounding area. Our experts can offer competent and approachable advice on property management and real estate investment matters. Contact us online or call us at 603-448-8808.

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