Knowing the most recent real estate jargon is crucial as a Frisco 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. Furthermore, it can help you make rational choices when negotiating with prospective buyers or renters. In a competitive market, it is important to know the six terms listed below. Examine each one in great detail.
Real estate companies are called “iBuyers” when they use technology to submit immediate offers on properties. In recent years, these companies have grown in popularity as they offer a convenient and quick way to sell your home. Since they offer homeowners much more convenience, iBuyers have significantly altered how people buy and sell residential properties.
“Days on market” is what DOM stands for. How long a property has been up for sale is gauged by this metric. 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 could be a warning sign, but it could also be a sign of seasonal changes in the housing market (homes are bought faster during spring than in the winter). You can also tell if a market is strong (a low average DOM) or weak (a high average DOM), by looking at the average DOM for a specific area. Buyers typically gain from a weak market.
“Real estate owned” is referred to as REO. Usually, because it didn’t sell at the foreclosure auction, this term refers to a property that’s been foreclosed on and is now owned by the lender. 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 significant to note that these sales are frequently made “as-is,” which makes financing challenging.
FHA 203k Rehab Loan
The FHA 203k rehab loan is a government-backed loan that lets purchasers finance the acquisition of a home that needs repairing. This type of loan can be used to finance modifications and repairs, making it a great option for investors seeking to acquire properties requiring repair. This can also be used to update older homes’ energy-related features. It is not intended for “luxury” additions like installing a pool.
“Debt-to-income” ratio is referred to as DTI. This metric is used by lenders to calculate how much of your income is being used to pay off debt. To determine your DTI, add your monthly housing payment to your total debt payments, divide that number by your gross monthly income, and multiply the result by 100. Its purpose is to calculate your ability to pay for a mortgage. It can be hard to qualify for a loan if your DTI is high, so it’s vital to have this number low. An ideal borrower for a lender is one who pays no more than 36% of their monthly income on debt and no more than 28% of their income on housing.
EMD is an acronym for “earnest money deposit.” Also known as a “good faith deposit,” this is a deposit that buyers are required to make when making an offer on a property. An EMD can help persuade a seller to accept an offer by showing the buyer’s seriousness and urgency. In most instances, the amount of EMD given is between 1 and 5%, but this can vary based on the situation and market competition. In most cases, the EMD is kept in escrow and, if the deal closes, applied to the cost of buying the house.
As is evident, Frisco property managers must be knowledgeable about a variety of real estate terms. In a market that is competitive, knowledge is power.
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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