Skip to Content

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 necessary to stay informed on the latest real estate terms. A lot is changing in the real estate market. Knowing about these changes can help you safeguard your investments and grow your portfolio. Being smart will help you make informed decisions when dealing with potential buyers or renters. It is important to know these six terms in a competitive market. Let’s take a closer look at each one.



iBuyers are real estate companies that use technology to provide simple and fast home-selling solutions. They present an innovative and reliable way of selling residential properties quickly, with minimal effort from the homeowners. Real estate market data is analyzed by complex algorithms by iBuyers. This lets them make fast, competitive offers based on the current market conditions.


As part of the iBuying process, homeowners usually post their property details to an iBuyer’s website. After that, the iBuyer assesses the property and makes an instant cash offer within 24-48 hours. The homeowner may choose a closing date and get paid in a few days if the offer is accepted.


One big benefit of iBuyers is that they make selling your home easy, eliminating the necessity for staging, open houses, and negotiations. Homeowners can avoid the stress of getting their houses ready for showings and waiting months to sell their properties.


Days on Market (DOM)

When you’re seeking a new property, you need to be familiar with some important real estate terms. “DOM,” which stands for “days on the market,” is one of these terms. This metric shows the number of days a property has been listed for sale. 


If the DOM is high, it could mean that the property has remained on the market for quite 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. In particular, homes usually sell quicker in spring than in winter. 


By looking at the average DOM for a particular area, 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 typically favors buyers, who may find it easier to negotiate a better deal.


Real Estate Owned (REO)

REO property, which stands for “Real Estate Owned,” is a type of property that a lender owns after the past owner fails to fulfill mortgage payments and the property has been foreclosed on. Usually, this arises when the property fails to sell at a foreclosure auction


Since they have the potential to be purchased below market value, REO properties can be good for an investor’s investment opportunity. As important as it is to remember that these sales often come with dangers since the property is sold “as-is.” The buyer will have to pay for any necessary repairs or renovations that need to be finished, and it can be hard to get funding.


FHA 203k rehab loan

One type of loan that is backed by the federal government is the FHA 203k rehab loan. It is meant to help homebuyers to finance the purchase of a property that needs major fixes or renovation.


It’s possible to use the loan to fund repairs and renovations, such as making the structure better, repairing plumbing and electrical issues, and putting in 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. 


One of the best aspects of the FHA 203k rehab loan is that it allows buyers to finance the cost of the repairs and modifications into the mortgage. In this manner, they don’t have to pay for these expenses out of pocket. Furthermore, you can use the loan to purchase a property needing repair and refinance a house that you already own. 


However, it is vital to keep in mind that the loan is not proposed for “luxury” renovations such as building a swimming pool or other non-essential amenities. The loan is projected to help homeowners make essential repairs and updates to their houses 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 utilize to see how much of your monthly income goes toward paying debts. DTI is found 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 gives lenders an idea of how much of your income you can afford to put forward a mortgage and how much of your income is already going toward paying off debts.


Having a high DTI can make it difficult to qualify for a loan, so it’s advisable to keep this number low. Most of the time, lenders prefer borrowers to spend no more than 28% of their monthly income on housing payments and 36% or less on monthly debt payments. It is more likely that you will be accepted for a loan or a mortgage if your DTI is low.


Keep in mind that lenders may have slightly different standards for estimating DTI ratios, depending on the kind of loan or mortgage you’re requesting. For instance, some lenders may allow a higher DTI ratio for borrowers with excellent credit scores.


Nonetheless, keeping your DTI ratio low is vital for maintaining good financial health and making it less difficult to obtain financing when needed. If you are having difficulty with a high DTI, you might need to pay off your bills, boost your revenue, or seek 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 attests to the buyer’s determination and eagerness to purchase the property, which can push the seller to accept the offer. You can get between 1% and 5% EMD most of the time, but it 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 transaction is successful.


If you’re a rental property owner, you must be aware of various real estate terms. Learning about the newest changes in your industry can assist you in making sound decisions when negotiating with buyers or renters and protect your investments. Don’t forget that in a competitive market, knowledge is power. 



When you buy real estate in North Hollywood and the nearby areas, Real Property Management Vision can help you make passive income and become financially free. If you need help managing properties or investing in real estate, our experts can give you good, friendly advice. Contact us online or call us at 818-233-8789.

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.

The Neighborly Done Right Promise

The Neighborly Done Right Promise ® delivered by Real Property Management, a proud Neighborly company

When it comes to finding the right property manager for your investment property, you want to know that they stand behind their work and get the job done right – the first time. At Real Property Management we have the expertise, technology, and systems to manage your property the right way. We work hard to optimize your return on investment while preserving your asset and giving you peace of mind. Our highly trained and skilled team works hard so you can be sure your property's management will be Done Right.

Canada excluded. Services performed by independently owned and operated franchises.

See Full Details