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Real Estate Terms You Need to Know

A Sign That Reads Sold with Multiple OffersWhen you’re a Houston Heights rental property owner, it is essential to be familiar with the newest real estate terms. Keeping up with these changes can help you safeguard your investments and expand your portfolio as the real estate market is undergoing significant changes. You can use it to your advantage when haggling with prospective tenants or buyers. In a competitive market, it is important to know the six terms listed below. Let’s examine each one in more detail.


Real estate companies known as “iBuyers” make instant offers on properties using technology. In recent years, these companies have gained popularity as they provide a fast and accessible way to sell a home. Since they offer homeowners much more convenience, iBuyers have significantly altered how people buy and sell residential properties.


“Days on market” is referred to as DOM. This metric determines the length of time a property has been up for sale. A property’s DOM is calculated from the date it was listed on the MLS (multiple listing service) until the date the seller signed a contract to sell. A high DOM may be a warning sign, but it may also be the result of seasonal market fluctuations (homes typically sell faster in the spring than in the winter). By checking the average DOM for a given region, you can determine whether the market is weak (high average DOM) or strong (low average DOM). In a weak market, buyers typically prevail.


“Real estate owned” is known as REO. This phrase pertains to a home that has undergone foreclosure and has now been acquired by the lender, usually as a result that the home did not sell at the foreclosure auction. Due to the fact that many banks and lenders would rather sell a property than hold it, REO properties can present investors with the opportunity 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

The FHA 203k rehab loan is a government-backed loan that enables buyers to finance the acquisition of a home in need of repair. Investors looking to purchase properties in need of repair may find this type of loan to be a desirable option because it can be used to finance repairs and renovations. Updates to older homes’ energy efficiency can also be made using it. It is not designed to include “luxury” additions, such as a swimming pool.


DTI pertains 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 designed to determine how much mortgage you can comfortably afford. A high DTI can make it hard to qualify for a loan, so it is essential to keep this number low. A lender favors borrowers who spend 36% or less on monthly debt payments and 28% or less of their monthly income on housing.


“Earnest Money Deposit,” or EMD, is another term you’ll also frequently come across. This deposit is required from buyers when submitting an offer to purchase a property and is occasionally referred to as a “good faith deposit.” An EMD can help persuade a seller to accept an offer by showing the buyer’s seriousness and urgency. The amount of EMD offered typically ranges between 1 and 5%, though it can change 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, Houston Heights property managers need to be conversant with a wide range of real estate terminology. Knowledge is power in a fiercely competitive market.

Your greatest asset in a market for rental properties that are constantly changing is having experts on your side. Contact us online to learn how you can gain access to insider knowledge and the best asset management services available.

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