Skip to Content

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 need to stay updated on the latest real estate terms. Significant shifts are occurring in the real estate market. Being aware of these changes can assist you in protecting your investments and growing your portfolio. Understanding of the information can help you make informed decisions when dealing with potential buyers or renters. In a competitive market, being familiar with the following six terms is important. Let’s examine each one in greater detail.



iBuyers are real estate companies that use technology to offer fast and convenient home-selling solutions. They offer an innovative and reliable way of selling residential properties in a matter of days with minimal participation from the homeowners. iBuyers use complex algorithms to examine real estate market data. This enables them to generate speedy and competitive offers using the present market conditions.


Homeowners usually initiate the iBuying process by entering their property details on an iBuyer’s website. The iBuyer then assesses the property and, within 24-48 hours, offers an instant cash offer. Once the offer is agreed upon, the homeowner can set a closing date and receive payment in a few days.


One of the primary advantages of iBuyers is that they make selling your home trouble-free by managing things like staging, open houses, and negotiations. Homeowners need not be worried about preparing their houses for showings and waiting months to sell their properties.


Days on Market (DOM)

When purchasing a new property, it’s important to familiarize yourself with certain fundamental real estate terms. One example is “DOM,” which stands for “days on the market.” This metric monitors the number of days a property has been listed for sale. 


A high DOM can suggest potential issues as it indicates that the property has remained on the market for an extended period without receiving any offers. It’s crucial to acknowledge, though, that seasonal changes in the real estate market may influence the DOM. For instance, homes have a tendency to be sold more quickly during the spring season compared to the winter season. 


By examining the average DOM for a particular region, you can assess whether the real estate market is robust (i.e., with a low average DOM) or sluggish (i.e., with a high average DOM). Buyers may have an advantage in a weak market as they may find it more convenient 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 following the foreclosure process due to the previous owner’s failure to make mortgage payments. This typically occurs when the house fails to sell at a foreclosure auction


For investors, REO properties can be a great investment opportunity due to their ability to be purchased below market value. However, you need to keep in mind that there are potential hazards associated with such transactions since the property is being sold “as-is.” The responsibility for any necessary repairs or renovations will fall on the buyer, and securing funding for these can be challenging.


FHA 203k rehab loan

The FHA 203k rehab loan is a loan program supported by the federal government. Its intention is to help homebuyers to finance the purchase of a property that needs serious repairs or reconstruction.


The loan can fund repairs and renovations, such as enhancing the structure, addressing plumbing and electrical issues, and installing new heating and cooling systems. Additionally, it can be used to make energy-efficient upgrades to older houses, such as installing new windows, doors, and insulation. 


A notable benefit of the FHA 203k rehab loan is that it allows buyers to finance the cost of the repairs and renovations into the mortgage. In this manner, they are not required to use their own funds to cover expenses. The loan can also be utilized to purchase a property needing repair and refinance an existing property. 


However, it is necessary to keep in mind that the loan is not intended for “luxury” enhancements such as constructing a swimming pool or other non-essential amenities. The purpose of the loan is to assist homeowners in making necessary repairs and improvements to their homes, enabling them 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 know how much of your monthly income goes toward paying debts. To find your DTI, add up your monthly mortgage or rent and other debt payments, divide the total by your gross monthly income, and multiply by 100. This computation can be utilized by lenders to determine how much of your income is already committed to paying off debts and how much mortgage you can afford.


Qualifying for a loan can be challenging if your DTI ratio is high, so it is important to maintain a low DTI. Lenders usually want 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 approved for a loan or a mortgage if your DTI is low.


It’s important to remember that the way you consider DTI ratios may vary depending on the type of loan or mortgage you’re seeking. An instance of this is when lenders may allow borrowers with excellent credit scores to have a higher DTI ratio.


No matter what, keeping your DTI ratio low is crucial for maintaining good financial health and making it easier to obtain financing when you need it. If you are experiencing difficulties due to high DTI, it may be beneficial to consider strategies like debt repayment, increasing your income, or talking 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 called a “good faith deposit.” This buyer’s deposit illustrates their commitment to purchasing the property, potentially increasing the chances of the seller accepting the offer. Usually, the EMD provided typically falls within the range of 1% to 5%, although this can vary depending on the market and the scenario. The EMD is held in escrow and will be used to purchase the price of the home if the deal is successful.


If you’re a rental property owner, it is essential to familiarize yourself with various real estate terms. Staying informed on the most recent developments in your industry can help you make sound judgments when negotiating with buyers or renters and protect your investments. Remember, in a competitive market, having knowledge is crucial. 



Real Property Management Teyata is prepared to assist you in achieving financial independence and generating passive earnings by investing in real estate in La Connor and the areas around it. Our team of professionals is available to provide you with convenient and effective assistance in property management and real estate investment. Contact us online or call us at 360-856-1010.

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