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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. Having a good understanding of the latest real estate terms is crucial for owners of rental properties. Being aware of the fluctuations occurring in the real estate market can assist you in safeguarding your investments and growing your portfolio. When you are negotiating with potential buyers or renters, being aware of what you know will help you make informed decisions. Having knowledge of these six terms is crucial in a competitive market. Let’s take a closer look at each one.



iBuyers are real estate companies that utilize technology to guarantee fast and convenient home-selling solutions. They offer an innovative and reliable way of selling residential properties promptly, with minimal effort needed from the homeowners. It takes a sophisticated procedure to look at real estate market data, which lets iBuyers make fast, competitive offers that depend on the current market conditions.


An iBuyer’s website is where homeowners input their property details as part of the iBuying procedure. Afterward, the iBuyer assesses the property and presents an instant cash offer within 24-48 hours. After the offer is accepted, the homeowner can set a closing date and receive payments within a few days.


iBuyers’ convenient sale procedure means you don’t have to worry about things like staging, open houses, and negotiations. Homeowners need not be concerned about getting their homes ready for showings and waiting months to sell their properties.


Days on Market (DOM)

Having a good understanding of essential real estate terms is crucial when you’re searching for a new property. As an illustration, “DOM” stands for “days on the market.” This metric shows the number of days a property has been listed for sale. 


A high DOM can be a red flag that the property has been listed on the market for a long time without any proposals. Moreover, the DOM can be influenced by seasonal changes in the real estate market. Real estate, for example, has a faster selling rate during the spring compared to the winter. 


Determine if the real estate market is strong (i.e., with a low average DOM) or weak (i.e., with a high average DOM) by examining the average DOM for a particular area. Buyers often have an advantage in a weak market as they can potentially 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 is unable to make mortgage payments and the property has been forfeited. It usually occurs when the house doesn’t sell at a foreclosure auction


For investors, REO properties can be a lucrative investment opportunity as they can be purchased at below-market value. Yet, you need to consider that because the property is being sold “as-is,” there are often associated risks involved. The responsibility for any necessary repairs or renovations will fall on the buyer; obtaining financing can be challenging.


FHA 203k rehab loan

The FHA 203k rehab loan is a loan program funded by the federal government. Homebuyers can use it to finance the purchase of a property that requires extensive repairs or renovations.


The loan can fund repairs and renovations, including but not limited to structural developments, plumbing and electrical upkeeps, and the installation of new heating and cooling systems. In addition, it can be used to make energy-efficient upgrades to older homes, such as setting up new windows, doors, and insulation. 


The primary benefit of the FHA 203k rehab loan is that it allows buyers to finance the cost of the repairs and improvements into the mortgage, eliminating the need to pay for these costs separately with their own funds. Moreover, the loan can be used to purchase a property needing repair and refinance an existing property. 


Specifically, the loan is intended for essential improvements and not for luxurious upgrades such as constructing a swimming pool or other non-essential amenities. The purpose of the loan was to assist homeowners in making necessary fixes 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 confirm the portion of your monthly income allocated towards paying debts. The calculation of DTI involves the combination of your monthly mortgage or rent and other debt obligations. This total is divided by your gross monthly income and multiplied by 100. This calculation gives lenders an awareness of how much of your income is currently allocated to paying off debts and the amount of mortgage you can afford.


Maintaining a low DTI is crucial as it can pose challenges in qualifying for a loan. Lenders usually prefer individuals to allocate no more than 28% of their monthly income on housing payments and 36% or less on monthly debt payments. If your DTI is lower, the likelihood of being approved for a loan or a mortgage increases.


You need to remember that lenders may have slightly different requirements for assessing DTI ratios according to the type of loan or mortgage you seek. For example, certain lenders might permit greater DTI ratios for borrowers with outstanding credit scores.


In any case, it is advisable to maintain a low DTI ratio in order to maintain good financial health and simplify the process of obtaining financing when necessary. If you find it challenging to manage a high DTI, consider reducing your debts, increasing your income, 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 desire and enthusiasm to purchase the property, potentially convincing the seller to accept the offer. Typically, the range for EMD offers is from 1% to 5%, although this may 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 turns out well.


Having knowledge of various real estate terms is important if you are a rental property owner. Keeping yourself updated on the most recent developments in the industry can assist you in making well-informed decisions while negotiating with buyers or renters and securing your investments. Keep in mind that in a competitive market, having knowledge gives you an advantage. 


Real Property Management Greenway is prepared to assist you in generating a passive income and gaining financial freedom through investments in real estate in Chamblee and nearby areas. Our professionals can offer competent and accessible guidance on property management and real estate investment issues. Contact us online or call us at 770-771-6102.

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