It’s crucial to keep abreast of the most recent real estate terms as a New Bedford rental property owner. Keeping up with these changes can help you safeguard your investments and expand your portfolio as the real estate market is undergoing significant changes. When negotiating with prospective buyers or renters, it may also help you to be well-informed. In a competitive marketplace, it is essential to understand the following six terms. Let’s examine each one in more detail.
A real estate firm that uses technology to make instant offers on homes is called an iBuyer. These businesses have grown in popularity in recent years due to the convenience and speed with which homes can be sold through them. In many ways, iBuyers have drastically altered how people buy and sell residential properties, as they provide homeowners with significantly more convenience.
“Days on market” is referred to as DOM. This metric determines the length of time a property has been up for sale. 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. Although it could be a red flag, a high DOM could also be the result of seasonal changes in the housing market (in spring, homes generally sell faster 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). Typically, buyers gain from a weak market.
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 significant to note that these sales are frequently made “as-is,” which makes financing challenging.
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. 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. This can also be used to update older homes’ energy-related features. It is not intended for “luxury” extras such as a swimming pool.
DTI pertains to “debt-to-income” ratio. This metric is used by lenders to determine how much of a borrower’s income goes toward debt repayment. 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 made to determine how much of a mortgage you can afford. 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. Borrowers who pay 28% or less for housing and 36% or less for monthly debt payments are typically preferred by lenders.
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.” An EMD can demonstrate a buyer’s seriousness and eagerness, thereby encouraging a seller to accept an offer. 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.
Clearly, New Bedford property managers must be familiar with a variety of real estate-related terms. Knowledge is power in a market that is competitive.
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