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 vital to stay updated on the latest real estate terms. The real estate market is enduring significant developments, and being aware of these changes can help you secure your investments and grow your portfolio. When you are negotiating with potential buyers or renters, keen knowledge will help you to make informed decisions. Knowing the following six terms is essential in a competitive market. Let’s examine each one in more detail.



iBuyers are real estate companies that leverage technology to provide convenient and efficient home-selling solutions. They provide an innovative and reliable way of selling residential properties in a few days, with the least amount of work from the homeowners. In order to make quick, competitive offers that are based on the current market conditions, iBuyers employ advanced algorithms to analyze real estate market data.


Homeowners usually have to upload property details to an iBuyer’s website in order to begin the iBuying process. Within 24-48 hours after assessing the property, the iBuyer makes an instant cash offer. Should the offer be approved, the homeowner will have a few days to arrange a closing date and get paid.


One of the significant advantages of iBuyers is that they offer a hassle-free selling process, eliminating the need for staging, open houses, and negotiations. Homeowners can bypass the anxiety of preparing their homes for showings and waiting months to sell their properties.


Days on Market (DOM)

Knowing imperative real estate terms is vital if you’re looking to buy a new property. The phrase “days on the market” or “DOM” is one example of this. This metric tracks the number of days a property has been listed for sale. 


When the number of days on the market is excessive, it can be a warning sign that no offers have been made during the property’s prolonged listing. But bear in mind that seasonal changes in the real estate market can have an influence on the DOM. For illustration, homes sell more quickly in the spring than they do in the winter. 


By examining the average DOM for a specific area, you can figure out 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 win in a weak market because it makes it simpler for them to negotiate a better deal.


Real Estate Owned (REO)

The term “Real Estate Owned,” or REO property, describes a type of property that a lender owns following a foreclosure on the property due to the previous owner’s inability to make mortgage payments. This tends to happen after a foreclosure auction, where the property is up for bid.


Due to the possibility of being acquired for below market value, REO properties might be an appealing investment opportunity for investors. To be clear, since the property is sold “as-is,” these sales frequently come with risks. The buyer will be liable for necessary repairs or renovations, and obtaining financing may be difficult.


FHA 203k rehab loan

Federal government support is provided for the FHA 203k rehab loan program. The goal of this program is to finance the purchase of a property that needs major repair or renovation.


The loan can fund repairs and renovations, including but not limited to structural improvements, plumbing and electrical fixes, and the installation of new heating and cooling systems. Adding new windows, doors, and insulation to older homes is another energy-efficient upgrade that can be done with it. 


One of the greatest perks of the FHA 203k rehab loan is that it allows buyers to finance the cost of the maintenance and upgrades into the mortgage, meaning they don’t have to pay for these expenses out of pocket. Plus, the loan can be utilized to purchase a property needing repair and refinance an existing property. 


However, it is vital to remember that the loan cannot be used for “luxury” renovations like a swimming pool or other non-essential amenities. With the financing, residents will be able to upgrade and repair their homes as needed 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 estimate the percentage of your monthly income that goes toward paying debts. DTI is computed by adding your monthly mortgage or rent and other debt payments, dividing the total by your gross monthly income, and multiplying by 100. The resulting figure provides lenders with an estimate of the portion of your income already going toward paying off debts and how much mortgage you can afford.


Keeping this number low is vital because a high DTI can make it tougher to qualify for a loan. Lenders frequently prefer that borrowers spend no more than 28% of their monthly income on housing payments and 36% or less on monthly debt payments. The smaller your DTI, the more likely you will be accepted for a loan or a mortgage.


Remember that depending on the kind of loan or mortgage you’re seeking, lenders may have slightly different standards for assessing DTI ratios. If a borrower has a good credit score, for example, some lenders might permit a higher DTI ratio.


Irrespective of the situation, having a low DTI ratio is essential for maintaining good financial health and making it easier to obtain financing when needed. Consider lowering your debts, earning more money, or seeking advice from a financial professional if you are having trouble managing a high DTI ratio. 


Earnest Money Deposit (EMD)

Earnest Money Deposit (EMD) is a deposit a buyer must make when offering a property. There is another name for it: a “good faith deposit.” Accepting the offer may be aided by the seller seeing that the buyer is sincere and anxious to purchase the property, as demonstrated by this deposit. Though it can change according to the market and situation, the amount of EMD offered is usually between 1% and 5%. The EMD is held in escrow and is applied to the purchase price of the home if the transaction goes through.


As a rental property owner, it is crucial to be familiar with various real estate terms. Maintaining current knowledge of market developments will assist you in protecting your investments and making wise choices when negotiating with buyers or renters. Keep in mind that knowledge is power in a competitive market


Real estate investments in Cumberland and the surrounding areas can help you achieve financial independence and a passive income. Real Property Management Providence is ready to help. Our professionals are able to provide knowledgeable and friendly guidance on issues related to real estate investing and property management. Contact us online or call us at 401-272-3300.

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