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Real Estate Terms You Need to Know

A Sign That Reads Sold with Multiple OffersIt’s crucial to keep abreast of the most recent real estate terms as a Brightwood rental property owner. As the real estate market undergoes significant changes, maintaining awareness of these changes can help you secure your investments and expand your portfolio. It can also assist you in making informed decisions during negotiations with prospective purchasers or tenants. The following six terms are crucial to understanding a market where there is fierce competition. Let’s view each in greater detail.


Real estate companies known as “iBuyers” make instant offers on properties using technology. As they provide a simple and quick way to sell your home, these businesses have grown in popularity over the past few years. In many ways, iBuyers have drastically altered how people buy and sell residential properties, as they provide homeowners with significantly more convenience.


DOM is the abbreviation for “days on market”. The length of time a property has been up for sale is indicated by this metric. The property’s DOM is determined by calculating from the day it is put on the MLS (multiple listing service) to the day a seller who desires to sell signs a contract. While a high DOM may be cause for concern, it can also be a sign of seasonal changes in the housing market (homes tend to sell faster in the spring than in winter). Moreover, by observing the average DOM for a given area, you can identify whether the market is weak (high average DOM) or strong (low average DOM). In a weak market, buyers typically prevail.


“Real estate owned” is what REO stands for. This term refers to a property that has undergone foreclosure and has come under the ownership of the lender, usually as a result of it not selling at the foreclosure auction. Since many banks and lenders would prefer to sell a property than hold it, REO properties can offer investors the chance to buy below market value. The fact that these sales are frequently “as-is” makes financing challenging, so it is important to note this.

FHA 203k Rehab Loan

Buyers can finance the purchase of a fixer-upper with an FHA 203k rehab loan, which is a government-backed loan. This kind of loan is an appealing choice for investors looking to buy properties that need repairs because it can be used to pay for repairs and renovations. It can also be used to improve the energy efficiency of older homes. It is not designed to include “luxury” additions, such as a swimming pool.


DTI refers to “debt-to-income” ratio. This metric is used by lenders to determine how much of your income goes toward debt payments. DTI is calculated by adding your total monthly debt payments and housing costs, dividing that sum by your gross monthly income, and multiplying that result by 100. It is intended to determine the maximum mortgage payment you can make. Keep this number low because a high DTI can make it tough to be approved for a loan. Borrowers who pay 28% or less for housing and 36% or less for monthly debt payments are typically preferred by lenders.


EMD is abbreviated as “earnest money deposit.” Often referred to as a “good faith deposit,” this is a deposit that buyers must make when submitting an offer on a property. An EMD can convince a seller to accept an offer by showing how serious and eager a buyer is. The percentage of EMD offered ranges from 1 to 5% in the majority of cases, but it can be higher or lower depending on the circumstance and the level of market competition. Typically, the EMD is held in escrow and applied to the home’s purchase price if the transaction closes.

As you can see, Brightwood property managers need to be conversant with a wide range of real estate terminology. Knowledge is key in a competitive industry.

Your greatest asset in an ever-changing market for rental properties are the professionals at your disposal. Contact us online to learn how you can gain access to insider knowledge and the best asset management services available.

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