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 imperative to be aware of the latest real estate terms. There are major changes occurring in the real estate market that you should be aware of in order to protect your investments and grow your portfolio. Astute awareness will help you to make informed decisions when you are dealing with potential buyers or renters. The following six terms are essential to understand in a competitive market. Let us examine each one more closely.



iBuyers are real estate companies that use technology to offer convenient and expedient home-selling solutions. They offer an innovative and reliable way of selling residential properties in a matter of days, with minimal effort from the homeowners. Through the use of sophisticated algorithms to evaluate real estate market data, iBuyers are able to make offers quickly and competitively based on the current market conditions.


The iBuying process typically involves homeowners submitting their property details to an iBuyer’s website. The iBuyer then assesses the property and makes an instant cash offer within 24-48 hours. If the offer is accepted, the homeowner can schedule a closing date and receive payment in a few days.


iBuyers provides a hassle-free selling process, doing away with the necessity for staging, open houses, and negotiations. By doing this, homeowners can avoid the stress of staging their homes for showings and waiting months to sell their properties.


Days on Market (DOM)

It’s crucial to comprehend essential real estate terms when searching for a new property. “DOM” or “days on the market” is one example of such a word. This metric counts the number of days a property has been listed for sale. 


If the property has been on the market for a long time without receiving any offers, a high DOM may be cause for concern. Nonetheless, it is noteworthy that seasonal changes in the real estate market have the potential to impact the DOM. For example, properties usually sell in the spring rather than the winter. 


By studying the average DOM in an area in particular, you can find out whether the real estate market is sturdy (i.e., with a low average DOM) or weak (i.e., with a high average DOM). Buyers typically benefit from a weak market since it may be simpler for them 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 meet mortgage payments and the property has been foreclosed on. This generally occurs when a foreclosure auction is held and the property is not sold.


Because they may be bought below market value, REO properties might be a desirable investment opportunity for investors. But because the property is being sold “as-is,” it is important to remember that these sales frequently carry hazards. The buyer will be responsible for any necessary repairs or renovations, and financing may be difficult to come by.


FHA 203k rehab loan

The FHA 203k rehab loan is a loan program backed by the federal government. Its purpose is to enable homebuyers to finance the purchase of a property that requires extensive restoration or repair.


The loan can fund repairs and renovations, including but not limited to structural enhancements, plumbing, and electrical work, and the installation of new heating and cooling systems. Older homes can also benefit from energy-efficient upgrades with their use, such as new windows, doors, and insulation. 


One of the primary benefits of the FHA 203k rehab loan is that it allows buyers to finance the cost of the repairs and reconstructions into the mortgage, saving them money by removing the need for them to be paid out of pocket. It is also possible to refinance an existing property or purchase a property needing repair


The loan is not meant for “luxury” improvements like installing a swimming pool or other non-essential amenities. It is important to remember that. The loan is intended to assist homeowners in updating and fixing their homes so they can live safely and comfortably in their properties. 


Debt to Income (DTI)

Lenders use the DTI, or debt-to-income ratio, as a financial metric to find out how much of your monthly income goes toward paying debts. To determine your DTI, sum up all of your monthly mortgage or rent and other debt payments, divide the total by your gross monthly income, and multiply by 100. This computation indicates to lenders how much of your income is already going toward paying off debts and how much mortgage you can sustain.


Maintaining a low DTI is crucial because a high one can make it difficult to qualify for a loan. Lenders generally want borrowers to spend no more than 28% of their monthly income on housing payments and 36% or less on monthly debt payments. Your chances of getting approved for a loan or a mortgage increase with a lower DTI.


You need to keep in mind that the type of loan or mortgage you’re asking may affect the criteria that lenders use to evaluate DTI ratios. For instance, some lenders may allow a higher DTI ratio for borrowers with excellent credit scores.


Regardless, a low DTI ratio is essential for maintaining good financial health and making it easier to obtain financing when needed. If you’re having trouble managing a high DTI, think about reducing your debt, earning more money, 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 also goes by the name “good faith deposit.” By demonstrating their earnestness and enthusiasm to purchase the property, the buyer’s deposit can persuade the seller to accept the offer. The typical range of EMD provided is 1% and 5%, though it can change according to the circumstances and the state of the market. If the deal is successful, the EMD is held in escrow and applied to the purchase price of the home.


As a rental property owner, it is imperative to be aware of various real estate terms. You can safeguard your investments and make well-informed decisions when negotiating with buyers or renters by keeping abreast of market developments. Do not forget that in a competitive market, knowledge is power. 

Real Property Management Traditions is prepared to help you invest in Santa Clarita and the surrounding area in order to achieve financial freedom and passive income. On issues pertaining to property management and real estate investment, our experts can provide knowledgeable and amiable guidance. Contact us online or call us at 661-266-1400.

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