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 be aware of the latest real estate terms. It is imperative to remain informed of significant developments taking place in the real estate market since this knowledge is crucial for safeguarding your investments and growing your portfolio. When engaging with potential buyers or renters, possessing keen awareness will empower you to make informed decisions. In a competitive market, familiarity with the following six terms is vital. Let us examine each one in greater detail.



iBuyers are real estate companies that use technology to provide fast and easy home-selling solutions. They offer an innovative and reliable way of selling residential properties in a matter of days, with minimal exertion from the homeowners. Through the use of sophisticated processes to evaluate real estate market data, iBuyers are able to make offers rapidly and competitively according to the current market conditions.


The first step of the iBuying procedure is for the homeowners to visit the iBuyer’s website and enter property details. After that, the iBuyer assesses the property and offers an instant cash offer within 24-48 hours. If the offer has been approved, the homeowner can set a closing date and expect payment within a week.


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. This saves homeowners the trouble of having to prepare their houses for showings and the frustration of having to wait for months to sell their properties.


Days on Market (DOM)

Knowing essential real estate terms is a must when on the lookout 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. 


A high DOM could indicate that the property has been sitting on the market for too long without any interested buyers submitting offers. However, it is important to note that the DOM may be affected by seasonal changes in the real estate market. For example, the spring is a more common time for real estate transactions than the winter. 


By looking at the average DOM in an area in particular, you can tell whether the real estate market is strong (i.e., with a low average DOM) or weak (i.e., with a high average DOM). In a weak market, buyers have an advantage since they may have an easier time 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 sustain mortgage payments and the property has been foreclosed on. This typically takes place after a foreclosure auction is held, but the property has not been sold.


REO properties can be an appealing investment opportunity to investors since they can often be purchased below market value. However, keep in mind that because the property is being sold “as-is,” there may be risks involved. The buyer will be liable for any necessary repairs or renovations, and financing may be tough to obtain.


FHA 203k rehab loan

The FHA 203k rehab loan is a loan program assisted by the federal government. It’s meant to help homebuyers finance the purchase of a property that needs major work done on them.


The loan can fund repairs and renovations, such as structural enhancements, plumbing and electrical repairs, and the installation of 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. 


The FHA 203k rehab loan is advantageous because it allows buyers to finance the cost of the repairs and renovations into the mortgage rather than having to pay for them out of pocket. It is also possible to refinance an existing property or purchase a property needing repair


This financing is not intended for “luxury” renovations such as building a swimming pool or other non-essential amenities. It is crucial to keep in mind that the loan is intended to assist homeowners in renovating 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 see how much of your monthly income goes toward paying debts. To find out your DTI, sum up your monthly mortgage or rent and other debt payments, divide the total by your gross monthly income, and multiply by 100. Thanks to this calculation, lenders can determine how much of your income is already going toward paying off debts and how much mortgage you can afford.


A high DTI might make it challenging to qualify for a loan, so keeping it low is essential. Lenders prefer that borrowers spend no more than 28% of their monthly income on housing payments and 36% or less on monthly debt payments. The likelihood of getting approved for a loan or a mortgage increases with a lower DTI.


Keep in mind that the requirements that lenders employ to evaluate DTI ratios may vary depending on the type of loan or mortgage you’re asking for. For instance, certain lenders may permit a higher DTI ratio for borrowers with outstanding credit scores.


Regardless, a low DTI ratio is critical for maintaining good financial health and making it easier to obtain financing when required. If you’re having problems with a high DTI, consider decreasing your debt, increasing your income, or consulting 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 known as a “good faith deposit.” The buyer’s deposit can convince the seller to accept the offer by proving the buyer’s seriousness about purchasing the property. The EMD is often offered between 1% and 5%, though this can vary depending on the specifics of the situation and the current market condition. If the sale goes through, the EMD is held in escrow and applied to the purchase price of the home.


As a rental property owner, you need to be aware of various real estate terms. You can protect your investments and make knowledgeable choices when negotiating with buyers or renters by keeping updated on market developments. Keep in mind that in a competitive market, having knowledge is the key to success. 



If you want financial independence and passive income, Real Property Management Vancouver is ready to assist you in making investments in Ridgefield and the surrounding area. Our professionals are well-versed in property management and real estate investment, and they are also kind and approachable. Contact us online or call us at 360-975-4683.

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