Maintaining knowledge of the most recent real estate jargon is crucial for Plano rental property owners. Maintaining awareness of the significant changes in the real estate market can help you safeguard 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 examine each of them.
Real estate companies are called “iBuyers” when they utilize technology to make immediate offers on houses. These companies have grown in popularity in recent years as a result of their convenient and quick home selling services. iBuyers have greatly changed how people sell and buy residential properties in many ways, since homeowners are provided with much more convenience.
DOM stands for the phrase: “days on market.” This metric indicates how long a home has been on the market. 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. 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). 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). Buyers typically gain from a weak market.
REO stands for “real estate owned.” This term refers to a property that has been foreclosed and is now in the lender’s possession, typically because it did not sell at the auction. Although most banks and lenders might rather sell a property than hold it, REO properties present an opportunity for investors to purchase below market value. It is worth noting that these sales are usually “as-is,” making financing tricky.
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. 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. Additionally, it can be applied to update older homes’ energy systems. It is not intended for “luxury” additions like installing a pool.
DTI is the acronym for “debt-to-income” ratio. The percentage of your income that is used to pay off debt is calculated by lenders using this metric. The DTI is computed by adding your monthly housing payment and your overall debt expenses, dividing by your monthly gross income, and multiplying by 100. It is intended to determine the maximum mortgage payment you can make. Keep in mind that a high DTI can make it challenging to be approved for a loan, so be sure to keep this number low. Lenders typically favor borrowers who pay no more than 36% of their monthly income on debt and no more than 28% of their income on housing.
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. In most situations, the amount of EMD supplied is between 1 and 5%, although this amount can vary depending on the situation and the competitiveness of the market. If the deal closes, the EMD is typically kept in escrow and used to reduce the cost of the house.
Plano property managers need to be knowledgeable about a wide range of real estate terms, as you can see. Knowledge is power when it comes to a competitive market.
Expertise is your most valuable asset in a rental property market that is constantly shifting. Contact us online to learn how you can gain access to insider knowledge and the best asset management services available.
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