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Essential Real Estate Terms to Know in a Competitive Market

Closeup of investor working at a laptop researching real estate terms. Being aware of the latest real estate terms is essential for an owner of rental properties. The real estate market is undergoing major changes, and keeping up with these developments is crucial for protecting your investments and growing your portfolio. If you have a good grasp of the situation, you can make informed decisions when you are dealing with potential buyers or renters. Understanding these six concepts will give you an edge in today’s competitive market. Each will be discussed in detail below.



iBuyers are real estate companies that use cutting-edge methods to deliver quick and convenient home-selling solutions. They offer an innovative and reliable way of selling residential properties in a couple of days, with little effort from the homeowners. Real estate market data is evaluated using complex processes by iBuyers so that competitive offers can be made quickly and in response to current market conditions.


Homeowners often start the iBuying procedure by visiting an iBuyer’s website and providing the necessary property details. After assessing the property, iBuyer provides an instant cash offer within 24-48 hours. If the offer is accepted, the homeowner can choose a closing date and anticipate payment within a week or so.


The biggest advantage of using an iBuyer is that it eliminates the hassle of selling your home the traditional way, such as through staging, open houses, and negotiations. Homeowners can avoid the worry of arranging their homes for showings and waiting months to sell their properties.


Days on Market (DOM)

If you’re in the market for a new property, familiarizing yourself with fundamental real estate terms is important. One such term is “DOM,” which is “days on the market.” This metric counts the number of days a property has been listed for sale. 


When the DOM is quite high, it’s a red flag that the property has been sitting on the market for a long time without any offers. However, seasonal changes in the real estate market may have an effect on the DOM. For illustration, homes commonly sell faster in spring than in winter. 


Determine whether the real estate market is strong (i.e., with a low average DOM) or weak (i.e., with a high average DOM) by looking at the average DOM figures. It’s frequently easier for buyers to negotiate a better deal in a weak market.


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 withstand mortgage payments and the property has been foreclosed on. In most cases, this is the result of a failed foreclosure auction


Investors may find REO properties attractive investment opportunities because of the possibility of purchasing them for below market value. The property is sold “as-is,” therefore there is no guarantee that it will be in good condition. The buyer is responsible for paying for any necessary repairs or renovations, and financing can be challenging to come by.


FHA 203k rehab loan

The FHA 203k rehab loan is a loan program sponsored by the federal government. It is made for people who want to finance the purchase of a property but can’t afford to pay cash because it needs a lot of work.


The loan can fund repairs and renovations, including but not limited to structural improvements, plumbing and electrical fixes, and installing new heating and cooling systems. New windows, doors, and insulation are just a few instances of energy-efficient upgrades that can be made to older homes using this fund. 


One of the key features of the FHA 203k rehab loan is that it allows buyers to finance the cost of the upkeep and renovations into the mortgage, relieving buyers of the burden of paying for these items out of pocket. Additionally, the loan can be used to purchase a property needing repair and refinance an existing property. 


However, it is important to emphasize that the loan shouldn’t be utilized for “luxury” improvements such as constructing a swimming pool or other non-essential amenities. The funding is intended to assist homeowners in much-needed maintenance and improvement to their homes so they can 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 discover how much of your monthly income goes toward paying debts. To compute your DTI, add your monthly mortgage or rent and other debt payments, divide the total by your gross monthly income, and multiply by 100. Lenders can see how much of your income goes toward paying off debts and how much of a mortgage you qualify for, thanks to this calculation.


Having a high DTI can make it difficult to qualify for a loan, so it’s advisable to keep this number low. Lenders often require 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 greater possibility of being approved for a loan or a mortgage.


It’s important to remember that lenders may have slightly varied standards for evaluating DTI ratios, depending on the type of loan or mortgage you’re asking for. For instance, borrowers with good credit scores may be approved for a higher DTI ratio with some lenders.


Regardless, a low DTI ratio is important for maintaining good financial health and making it simpler to obtain financing when necessary. Paying down debt, increasing income, or seeing a financial professional are all options if you find yourself coping with a high DTI. 


Earnest Money Deposit (EMD)

Earnest Money Deposit (EMD) is a deposit a buyer must make when offering a property. Alternatively, you can call it a “good faith deposit.” A deposit shows that the buyer is sincere about purchasing the property, which may increase the likelihood that the seller will accept an offer. Depending on the market and circumstances, the amount of EMD issued could be anywhere from 1% to 5%. The EMD is held in escrow and is applied to the purchase price of the home if the deal goes through.


It’s in your best interest to familiarize yourself with a wide range of real estate terms as a rental property owner. By keeping abreast of the market trends, you can better negotiate with buyers or renters and safeguard your investments. Remember that in a competitive market, knowledge is an advantage. 



Real Property Management Your Home is prepared to help you invest in real estate in Hixson and the nearby area in order to earn passive income and achieve financial independence. When you have questions about property management and real estate investments, our team of professionals is here to help. Contact us online or call us at 423-704-9944.

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