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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. Being aware of the latest real estate terms is essential if you’re an owner of rental properties. Being familiar with the shifts going on in the real estate market can help you protect your investments and grow your portfolio. You can use your savvy awareness to make informed decisions while bargaining with potential buyers or renters. Understanding these six concepts will give you a leg up in today’s competitive market. Let’s analyze each one in more detail.



iBuyers are real estate companies that utilize cutting-edge tools to deliver fast and convenient home-selling solutions. They provide an innovative and reliable way of selling residential properties in a matter of days, with minimal effort from the homeowners. iBuyers employ advanced algorithms to assess real estate market data, allowing them to make immediate and competitive offers based on the current market conditions.


Homeowners start the iBuying process by entering 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. With an accepted offer, the homeowner can choose a closing date and expect payment within a week.


iBuyers’ simplified selling procedure does away with time-consuming steps like staging, open houses, and negotiations. Instead of worrying about making repairs and waiting months to sell their properties, homeowners can just schedule showings. 


Days on Market (DOM)

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


A high DOM can be a sign of trouble, indicating that the property has been sitting empty on the market for some time without any offers. However, it’s critical to bear in mind that seasonal changes in the real estate market can affect the DOM. For example, homes typically sell faster in spring than in 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 evaluated by looking at the average DOM for that region. A weak market often favors 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 has failed to keep up with mortgage payments and the property has been foreclosed on. Typically, this happens when the property fails to sell at a foreclosure auction


For investors, REO properties can be a good investment opportunity since they have the potential to be acquired below market value. However, it is worth noting that these kinds of sales are typically associated with dangers since the property is sold “as-is.” The buyer is liable for paying for any necessary repairs or renovations, and getting a loan can be difficult.


FHA 203k rehab loan

The FHA 203k rehab loan is a loan program backed by the federal government. It is supposed to help homebuyers to finance the purchase of a property that needs significant repair or renovation.


The loan can fund repairs and renovations, including but not limited to structural improvements, plumbing and electrical upkeeps, and the setting up of new heating and cooling systems. It can also be used to insulate and replace windows and doors in older houses to make energy-efficient upgrades


The FHA 203k rehab loan is beneficial because it allows buyers to finance the cost of the repairs and improvements into the mortgage, eliminating the need for the buyer to come up with the money upfront. Additionally, the loan can be utilized to purchase a property needing repair and refinance an existing property. 


The loan, however, is not meant for “luxury” improvements like installing a swimming pool or other non-essential amenities. The loan is designed to help homeowners make necessary 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 figure out how much of your monthly income goes toward paying debts. To determine 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 use this figure to find out how much of your revenue is already committed to paying off debts and how much mortgage you can afford.


Having a high DTI can make it difficult to qualify for a loan. Therefore, it’s important to keep this number low. In most cases, 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 more manageable your DTI is, the better your chances of getting approved for a loan or a mortgage.


Keep in mind that the criteria lenders use to calculate DTI ratios might vary slightly, depending on the loan or mortgage you’re seeking. For instance, certain lenders may allow a larger DTI percentage for borrowers with good credit scores.


Keeping a manageable DTI ratio is essential for maintaining good financial health and making it easier to obtain financing when needed. Paying off debts, earning more money, or seeing a financial professional are all options if you find yourself dealing with a high DTI.


Earnest Money Deposit (EMD)

Earnest Money Deposit (EMD) is a deposit a buyer must make when offering a property. An alternative name for this is a “good faith deposit.” Sellers may be more likely to accept an offer that includes a deposit since it demonstrates that the buyer is serious about purchasing the property. Typically, the amount of EMD supplied is between 1% and 5%, but it might vary 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.


It is crucial for a rental property owner to have a firm grasp of the real estate terms. If you want to make smart judgments when negotiating with buyers or renters and safeguard your investments, being abreast of industry developments is essential. Knowledge, as they say, is power, especially in a competitive market



Investing in real estate in Filer and the surrounding area can help you build a passive income stream and reach your financial independence goals. Real Property Management Magic Valley is here to assist you. If you have questions about property management or real estate investments, our team of professionals can offer competent and approachable advice. Contact us online or call us at 208-734-4001.

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