Real Estate Market Analysis [Tips for Buying or Selling Property]

Buying or selling property can be exhilarating and daunting. Having a comprehensive understanding of real estate tendencies and property terminology can tip the balance of success in favor of prospective homebuyers and sellers.

The first step towards concluding a successful property transaction is to perform a real estate market analysis. But where do I start? What does it entail? And what is the ultimate purpose of it? This article will address the most significant queries of REMA and give potential dealers the confidence needed to take the plunge.

What Is a Real Estate Market Analysis?

This concept is a well-informed estimation of a property’s value, based on market predictions and other economic indicators. Such analysis aims to assist buyers and sellers in making educated decisions about the property being traded or sold.

Economic indicators of real estate value include:

• Available real estate investment opportunities vs demand.
• Interest rates on credit loans.
• Availability of funds in the form of secure loans and mortgages.
• The overall impact of the stock market on finances and economic activity.

Valuations can be influenced by the cost of recent transactions involving comparable properties in a particular region. In this instance, comparative market analysis (CMA) gives an indication of appropriate listing prices and competitive proposals based on property location.

The Purpose of REMA

Real estate statistics, collected by means of property market analysis, are invaluable in knowing what real estate actually is—since the market is prone to fluctuations over time.

Useful data helps determine the best investment strategies on whether to buy, sell, or hold on to the property until conditions are optimal. Essentially, employing market analysis for real estate can protect stakeholders from making bad venture judgments, ultimately losing value on investments.

Some real estate agents employ Customer Relationship Management (CRM) strategies to assist in this regard. CRM technology assists companies in the management of client accounts while promoting sound business practices and customer service. The best CRM for real estate includes HubSpot and Zillow Premier Agent CRM.

Property has become a great form of investment, but it can be a bit of a gamble when embarking on such an adventure. Understanding real estate will give buyers and sellers the upper hand in when to invest.

What Does a REMA Include?

A real estate market report can give insight into local social and political tendencies, community amenities, as well as financial opportunities and restrictions associated with real estate—indicating whether or not the property will grow in value or perhaps devalue in time.

Real estate market research may include information on the economic viability and environmental health of a region. Potential homebuyers then can form an awareness of local business achievements, service and utility maintenance protocol, as well as an overview of relevant benchmarks.

Property analysis also assesses favorable property locations, as well as the scope and age of property development, in addition to the general style of the original construction. The overall, current state of permanent structure repairs and additional features are also taken into consideration.

How to Do a Real Estate Market Analysis

Once you have identified a property that attracts interest, you’ll first need to look for accurate market analysis. Finding property doesn’t only have to happen through real estate agents. Did you know that you can get real estate leads from Craigslist? Search around for unexpected and future real estate opportunities in various places.

How do I get a free comparative market analysis? The internet is a rich source of websites and domains which provide free CMA information. Interested parties can easily access available information, themselves, or they can contact a real estate agent who may provide the same service, free of charge.

Although a do-it-yourself comparative market analysis (CMA) is not legally applicable to actual property appraisals or admissible for mortgage applications, it is an efficient way of determining the fair current market value of the comparable real estate.

Key Takeaways

Tips on How to Perform a Property Market Analysis

A property analysis entails the examination and assessment of the overall condition and measurable properties featured as part of the estate. Property surveyors pay particular attention to:

Property types

Is it a single-family apartment, townhouse, or condo?

Square footage

What are the measurements of the property in question? Is the home built on a single level or dispersed over multiple floors? How does it compare to the average price and square feet of similar properties in the region?

Room Numbers

How many bedrooms, bathrooms, and other functional spaces does the dwelling incorporate? Considering the room numbers is important, especially for reselling—families of three or four would likely need a home with more than one bathroom.

Special features

Assessors, when considering property market evaluation, include the number of fireplaces, garages, swimming pools, balconies, and other relevant additions to the home. Understanding real estate means that you have to take into account everything that might add value to the property. Special features increase the value of the property. Attention is also given to recent improvements or maintenance done on the property.

Property location

For real estate agents, location refers to the ease of access—typically referring to the property’s proximity to public transport, schools, hospitals, and other community amenities. Sometimes, properties might be devalued because, for example, they are near construction sites. But once the construction has finished, the property can double or even triple in value.

The location also incorporates the overall safety rating and walkability of the surrounding neighborhood.

Recent, Comparable Price Estimates

To attain a relative sales value, researchers investigate the investment details of a few houses in the area. The real estate market analysis report compares other properties that are similar to the one you are considering.

Specifics of real estate transactions in the region can be collected from the last three to six months. Data may be obtained from real estate listing sites or even by visiting a real estate office and can be filtered according to specific criteria, such as price, date sold, or city’s name. Listings usually come with photos, to give visual confirmation of the property’s features.

Alternatively, local newspapers, county registers, and deed offices also provide valuable information.

Compile Listing Prices of Comparable Properties

An all-inclusive, accurate comparative market analysis report, which includes comparable listing prices, can be of immeasurable value when determining home prices.

Listings are usually divided into three categories:

Current Listings

Referring to estimates of past home prices, investors can research listing prices of similar properties currently for sale in the area. Be cognizant, however, of inflated asking prices, set by wishful homeowners hoping to make an idealistic profit on their investment.

Pending Listings

Pending listings refer to real estate transactions that have recently been conducted but are not yet finalized. These listings give insight into housing market trends and the predominance of asking prices being met or exceeded.

Expired Listings

Having access to a list of expired property investment opportunities can be quite useful in identifying unacceptably high property cost listings in the area. It effectively serves as a guide to determine acceptable price ranges and trending market values.

In your comparative pricing research, your realtor would know how to look up recently sold homes online or otherwise, as well as what homes are selling in a given region.

Set Up a Price Range

Here are a few tips on how you can set up a price range for your property:

Determine the Ceiling Price

A ceiling price refers to the highest possible value of your property. Using listings of comparables as a guide, you should identify a property in the same area that offers marginally better features, selling price, and specifications than your property. Use the sales price of this particular listing to set your ceiling price.

Set the Floor Price

The floor price indicates the lowest limit of an acceptable real estate market research valuation of the subject property. Apply the same classification criteria to set the floor price of your investment. In this instance, however, select a listing that has slightly less to offer.

Establish the Price Range

When calculating your home value, its fair market value is effectively bound by the ceiling and floor price. Therefore, your property will be set to an estimated value of the floor and ceiling price.

Determine the Current Market Value

To settle on a realistic market value, consider the following:

• How does your house compare to other listings? Remember to consider home size, vintage, and special qualities. Consider whether it’s more luxurious, upscale, or comfortable, as well as family-friendly. What does the neighborhood have to offer, in terms of employment and recreational facilities?

Once you have sorted through the pros and cons, as deduced from a property market analysis, you should be able to determine the market value of your property.

The National Association of Realtors (NAR) advocates for federal, state, and local policy initiatives that bolster the public’s ability to own, buy, and sell the property. Their initiatives include a rigorous code of ethics and regulations set by the law. Those affiliated with this association serve clients by making available information accessible. Thousands of realtors across the US have the right to real estate market information. Utilizing real estate CMA software can also be equally helpful in this regard.

Real Estate vs Comparative Market Analysis

There is often confusion when defining the difference between market analysis for real estate and comparative market analysis. Many sources use the terms interchangeably—comparing the process of valuing property to other similar real estate investment opportunities.

What is market analysis in real estate? This term describes an assessment and comparison of current market values of properties, to determine market value. By using comparisons and differentiation, a value can be determined.

When a single property is being assessed—without drawing comparisons to other properties in the same category—a market appraisal is called for. In this instance, an accredited, certified realtor will depend on his knowledge and judgment to evaluate the property in question.

Conclusion

When contemplating how the real estate market works, it’s important to do your homework. Whether you opt to consult real estate lead generation companies or set out on your own, the principles and process remain the same.

Invest in a reputable REMA that not only underscores the best features of your dream house but also highlights its pitfalls. Compare market values to properties similar to your own and be realistic about an asking price.

Buying a home is the most rewarding investment a person can make. Making the right decisions along the way renders the reward that much sweeter.