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 important to keep up to date with the latest real estate terms. There are many changes occurring in the real estate market. Being aware of this modification can assist you in protecting your investment and growing your portfolio. Having knowledge will help you make informed decisions when interacting with potential buyers or renters. Understanding these six terms is important in a competitive market. Let’s examine each one in more detail.



iBuyers are real estate companies that use technology to offer quick and straightforward home-selling solutions. They present an innovative and reliable way of selling residential properties quickly, requiring little participation from the homeowners. Real estate market data is assessed by sophisticated algorithms by iBuyers. This enables them to generate quick, competitive offers using the present market conditions.


When participating in the iBuying process, homeowners typically upload their property details to an iBuyer’s website. Following that, the iBuyer assesses the property and makes an instant cash offer within 24-48 hours. If the offer is granted, the homeowner may select a closing date and receive payment in a few days.


A major advantage of iBuyers is their ability to simplify the process of selling your home, removing the need for staging, open houses, and negotiations. Homeowners can avoid the pressure of getting their houses ready for showings and waiting months to sell their properties.


Days on Market (DOM)

When looking for a new property, it is essential to have a good understanding of key real estate terms. “DOM,” which stands for “days on the market,” is one of these terms. This metric displays the number of days a property has been listed for sale. 


If the DOM is high, it may indicate that the property has been listed on the market for a significant period without any offers. Nevertheless, it is important to remember that the DOM can be influenced by seasonal changes in the real estate market. For example, houses tend to be sold at a faster pace during the spring season compared to the winter season. 


By examining the average DOM for the area in question, you can determine whether the real estate market is strong (i.e., with a low average DOM) or weak (i.e., with a high average DOM). Buyers tend to have an advantage in a weak market, as they may have more opportunities 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 following the previous owner’s failure to meet mortgage payments, resulting in foreclosure. Typically, this arises when the property fails to be sold during a foreclosure auction


REO properties can present a favorable investment opportunity for investors due to their potential to be acquired at below-market value. It is important to remember the potential risks associated with these sales, given that the property is sold “as-is.” The purchaser will be responsible for covering the costs of any necessary repairs or renovations that require completion, and securing funding can pose challenges.


FHA 203k rehab loan

One type of loan that is supported by the federal government is the FHA 203k rehab loan. It is intended to help homebuyers to finance the purchase of a property that needs significant fixes or remodeling.


It’s possible to use the loan to fund repairs and renovations, including enhancing the structure, addressing plumbing and electrical problems, and installing 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 main advantages of the FHA 203k rehab loan is that it allows buyers to finance the cost of the repairs and enhancements to the mortgage. By doing so, they are not required to personally cover these costs. In addition, you can use the loan to purchase a property needing repair and refinance a house that you already own. 


However, you should remember that the loan is not intended for “luxurious” renovations like constructing a swimming pool or other non-essential amenities. The loan is expected to assist homeowners in making critical repairs and upgrades 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 calculate the share of your monthly income that goes toward paying debts. The DTI is calculated by summing your monthly mortgage or rent and other debt payments, dividing the total by your gross monthly income, and multiplying by 100. This figure provides lenders with an indication of how much of your income can be allocated toward a mortgage and how much of your income is already going toward paying off debts.


Maintaining a low DTI is recommended as it can pose challenges in qualifying for a loan. 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. If you’re DTI is low, there is a higher chance of being approved for a loan or a mortgage.


It is important to note that lenders may have varying criteria for calculating DTI ratios, contingent upon the kind of loan or mortgage you’re asking. For instance, some lenders may permit a higher DTI ratio for borrowers with excellent credit scores.


Nonetheless, it is crucial to maintain a low DTI ratio to maintain good financial health and make it simpler to obtain financing when needed. If you are struggling with a high DTI, you might need to settle your debt, increase your earnings, or consult with 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 serves as evidence of the buyer’s commitment and enthusiasm to purchase the property, potentially influencing the seller to accept the offer. Typically, you can get between 1% and 5% EMD, but it can 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 transaction is successful.


If you’re a rental property owner, you need to have knowledge of different real estate terms. Gaining knowledge about the latest developments in your industry can assist you in making informed choices when negotiating with buyers or renters and safeguard your investments. Remember that in a competitive market, having knowledge gives you an advantage. 



When you buy real estate in Riverview and the surrounding areas, Real Property Management Freedom can help you generate passive income and become financially free. If you need assistance with property management or real estate investment, our team of experts is available to provide you with helpful and amicable guidance. Contact us online or call us at 813-867-2667.

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