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, it is in your best interest to keep up with the latest real estate terms. The real estate market is undergoing significant changes, and keeping up with these trends could help you protect your holdings and grow your portfolio. Your savvy will serve you well to make informed decisions when dealing with potential buyers or renters. Having a firm grasp of these six terms will set you apart in today’s competitive market. This post will examine each one closely.



iBuyers are real estate companies that use state-of-the-art methods to provide easy and quick home-selling solutions. They provide an innovative and reliable way of selling residential properties in a couple of days, with little effort from the homeowners. iBuyers use sophisticated procedures to analyze real estate market data, which enables them to make quick and competitive offers based on the present market conditions.


The iBuying process begins when a homeowner submits their property details to an iBuyer’s website. After assessing the property, iBuyer offers an instant cash offer within 24-48 hours. If the offer has been accepted, the homeowner can decide on a closing date and receive payment within a week.


The time and effort saved with iBuyers simplified the selling process over traditional methods like staging, open houses, and negotiations. Homeowners won’t have to stress over preparing their homes for showings and waiting months to sell their properties.


Days on Market (DOM)

Understanding pertinent real estate terms is crucial when on the lookout for a new property. One such term is “DOM,” which is “days on the market.” This metric tracks the number of days a property has been listed for sale. 


When the DOM for a property is too high, it may be because it was sitting on the market for too long without receiving any proposals. However, you need to keep in mind that seasonal changes in the real estate market can affect the DOM. For instance, homes mostly sell quicker in spring than in winter. 


By examining the average DOM for a particular location, you can recognize whether the real estate market is strong (i.e., with a low average DOM) or weak (i.e., with a high average DOM). Buyers typically fare better in a weak market since they may have an easier time negotiating 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 fail to pay the mortgage payments and the property has been foreclosed on. This commonly takes place after a foreclosure auction ends with no buyers. 


Since REO properties can be acquired below market value, they present an attractive investment opportunity for savvy investors. However, you need to remember that because the property is being sold “as-is,” unforeseen problems may arise. The buyer will be accountable for paying for any necessary repairs or renovations that are needed, and financing can be difficult to come by.


FHA 203k rehab loan

The FHA 203k rehab loan is a loan program assisted by the federal government. It’s made for homebuyers who want to finance the purchase of a property but can’t afford the full asking price since it needs so much repair.


The loan can fund repairs and renovations, including but not limited to structural improvements, plumbing and electrical repairs, and the installation of new heating and cooling systems. It can be used to make energy-efficient upgrades to older homes, such as installing new windows, doors, and insulation. 


The FHA 203k rehab loan is helpful since it allows buyers to finance the cost of the fixes and upgrades into the mortgage rather than paying for them out of pocket. Additionally, the loan can be utilized to purchase a property needing repair and refinance an existing property. 


However, keep in mind that “luxury” improvements, such as the installation of a swimming pool or other non-essential amenities, are not covered by the loan. The money from the loan can be used to help homeowners make necessary fixes and renovations to their homes 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 determine the amount of your monthly income that goes toward paying debts. DTI is evaluated by adding your monthly mortgage or rent and other debt payments, dividing the total by your gross monthly income, and multiplying by 100. Lenders can use this figure to recognize how much of your income is already dedicated to paying off debts and how much mortgage you can pay for.


A high DTI can make it tough to qualify for a loan, so it’s crucial to keep this number low. Generally, lenders look for borrowers to spend no more than 28% of their monthly income on housing payments and 36% or less on monthly debt payments. If your DTI is low, you have a better chance of getting a loan or a mortgage.


Remember that the criteria that lenders use to determine DTI ratios might vary slightly depending on the type of loan or mortgage you’re looking for. For instance, some lenders may allow a higher DTI ratio for borrowers with excellent credit scores.


In any case, keeping your DTI ratio low is essential for maintaining good financial health and making it easier to obtain financing if needed. Paying off debt, earning more money, or contacting a financial professional are all options if your DTI ratio is high and you’re having difficulties getting by. 


Earnest Money Deposit (EMD)

Earnest Money Deposit (EMD) is a deposit a buyer must make when offering a property. You can also call it a “good faith deposit.” Sellers may feel more convinced to accept the offer that includes a deposit since it shows that the buyer is serious about purchasing the property. The percentage of EMD provided can vary depending on the market and the specifics of the condition, but it is commonly between 1% and 5%. The EMD is held in escrow and credited toward the purchase price of the home if the sale goes through.


As a rental property owner, you need to familiarize yourself with various real estate terms. Staying up-to-date with the current industry fluctuations can help you make well-versed decisions when negotiating with buyers or renters and safeguard your investments. Bear in mind that in a competitive market, information is the key to success. 



If you’re looking to invest in real estate in Phoenix and the surrounding area to generate passive income and gain financial independence, Real Property Management Exclusive is here to help. When it comes to property management and real estate investment, our professionals can provide reliable advice. Contact us online or call us at 480-716-7899.

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