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Real Estate Terms You Need to Know

A Sign That Reads Sold with Multiple OffersAs a Cabot rental property owner, it is essential to remain current on the latest real estate terminology. The real estate market is changing significantly, and staying ahead of these changes can assist you in safeguarding your investments and expanding your portfolio. When negotiating with prospective buyers or renters, it may also help you to be well-informed. The next six terms should be understood in order to succeed in a competitive market. Let’s observe each of them more closely.


An iBuyer is a real estate company that makes instant offers on homes using technology. These companies have grown in popularity in recent years as a result of their convenient and quick home selling services. Since they provide much more accessibility to homeowners, iBuyers have fundamentally changed how people buy and sell residential properties.


DOM stands for the phrase: “days on market.” This metric indicates how long a home has been on the market. The DOM of a property is determined from the day it is put on the MLS (multiple listing service) to the day a seller enters into a contract to sell it. A high DOM may be a red flag, but it may also be caused by seasonal fluctuations in the housing market (homes are usually bought faster in the spring than in the winter). Additionally, by examining the average DOM for a specific region, you can discern which market is strong (low average DOM) or weak (high average DOM). Normally, a weak market favors purchasers.


REO is an acronym for “real estate owned.” This term refers to a property that has been foreclosed upon and is now in the possession of the lender, typically because it failed to sell at the foreclosure auction. REO properties can be an opportunity for investors to purchase below market value, as many banks and lenders would often sell a property than keep it. It is worth noting that these sales are usually “as-is,” making financing tricky.

FHA 203k Rehab Loan

The purchase of a fixer-upper can be financed with an FHA 203k rehab loan, which is a government-backed loan. Considering that this kind of loan can be used to pay for renovations and repairs, it appeals to investors looking to buy properties that need work. This can also be used to retrofit older homes with energy-efficient features. It is not intended for “luxury” extras such as a swimming pool.


“Debt-to-income” ratio is called DTI. This metric is used by lenders to determine how much of a borrower’s income goes toward debt repayment. DTI is determined by adding your monthly housing payment and total debt expenses, dividing that number by your monthly gross income, and multiplying that by 100. It is designed to determine how much mortgage you can comfortably afford. Maintaining a low DTI is crucial because a high DTI can make it hard to be approved for a loan. Typically, a lender favors borrowers who spend 28% or less on housing and 36% or less on monthly debt payments.


The acronym EMD stands for “earnest money deposit.” This is a deposit that buyers must make when submitting an offer on a house; it is also referred to as a “good faith deposit.” A seller might be persuaded to accept an offer by an EMD, which can show how serious and willing a buyer is. The percentage of EMD offered varies depending on the circumstance and the level of market competition, but it typically ranges between 1 and 5%. If the deal closes, the EMD is typically kept in escrow and used to reduce the cost of the house.

Cabot property managers must be conversant with a wide range of real estate terminology, as you can see. Knowledge is power when it comes to a competitive market.

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