Real estate is one of the best investments. The services of real estate are inexpensive, inexpensive, does not require major investment risks, real estate can be sold at any time, provide cash flow in the future.
Real Estate Market Analysis 2020 is an up-to-date research on worldwide markets for commercial and residential properties. The real estate market analysis provides information on key trends and drivers of the world real estate industries. It helps to identify emerging opportunities and assess risk factors in your industry.
A real estate market analysis is a tool that helps us to gather information to know, for example, if we should invest in a property or to determine the rental potential of a city or district. In fact, it would be crazy to buy a property without having information to support a purchase of this size.
A real estate market analysis, also known as a comparative market analysis, is an analysis of current market values of properties, comparable to a property you are looking to buy or sell.
A real estate market analysis should always be done, whether buying or selling a property, as it will help to understand the current market, how much similar properties are worth, if it is an investment property, how much you can charge for rent, etc.
Real estate agents and brokers create reports to help sellers set list prices for their homes and, less frequently, to help buyers make competitive offers.
The information gathered through a real estate market survey helps the seller choose a listing price and helps buyers see if the asking price is too high, low or reasonable.
Research neighborhood quality and amenities
County assessor websites and Street View by Google Maps are excellent tools to use to research and narrow down potential property purchases without ever leaving your office. If the house backs to a garbage dump or major highway you can simply delete the property from your list and move on to the next one.
Other neighborhood qualities and amenities that affect property value include closeness to public transportation, proximity to shopping and schools, and nearby recreational amenities like parks and beaches.
If you have your eye on a particular single-family home, you can also pop in the address into Roofstock’s Cloudhouse tool. You’ll get a comprehensive and fully customizable underwriting estimate, as well as a 1-5 star rating of the neighborhood powered by Roofstock’s proprietary Neighborhood Rating.
Assess the Original Listing Price
Once you’ve done the property analysis, look online for the original listing, if possible. This will give you a good idea of the general condition of the home. Go through the photos and descriptions for any upgrades, remodels or potential issues. The builder or developer should also be listed so you can determine if it was custom built or cookie-cutter home.
Obtain property value estimates for the area
Calculating the average sale price per square foot for home sales in the area you’re considering is a good way to determine a “ballpark” property value estimate. Local real estate agents, property management companies, online listing databases, and the county assessor website are all good resources to use.
Keep in mind that these average calculations are just that. They don’t take into account unique aspects of the house or the neighborhood that may increase or decrease the value of your subject property.
Check Property Value Estimates
Utilize online resources like Zillow Zestimates to give you the estimated market value of the home. As these are market value estimates, they may not be totally accurate, especially if changes have been made to the home. But this will provide a good starting number to go off of as you continue your real estate market analysis.
Select comparables for your real estate market analysis
Begin your initial real estate market analysis by selecting six comparable properties. Three should be homes in the neighborhood that have sold within the last few months; then choose three more homes that are currently on the market.
When selecting comparables for your subject property look for:
- Homes with the same number of bedrooms and bathrooms.
- Houses having square footage within 10% to 20% of your intended purchase.
- Property with a similar lot size and shape.
- Select houses with a similar original construction date, elevation (also known as architectural design), and number of floors or stories.
- Homes with similar features such as free standing garage, outdoor swimming pool or patio deck, and scenic views.
- Choose homes in the same neighborhood and preferably on the same block.
- Select properties that are in the same school zone (because a low-quality school can have a significant negative impact on value).
Search Comps
The next step is to search for properties that are comparable to yours. Comparable properties should have the same number of bedrooms and bathrooms, within 300 square feet in size, located in the same neighborhood, similar lot size, age of home and features.
Identify Recently Sold Properties in the Area
By looking up sold listings online, you will be able to see exactly how much similar homes sold for in the area. Look at past listings within a radius of one to three miles from your property. Search for homes that were sold in the last three months, as this will give you the most accurate value as market trends fluctuate. Then, if necessary, expand your search to the last six months. Pick three to five comparable properties and add them to your list of comps.
Search for Current Listings of Comparable Homes
Next, look for current listings of comparable homes within a one to three mile radius. Choose three homes, at minimum, that are comparable to yours. Keep in mind that these listing prices are not necessarily real values. Typically, a sellers’ market tries to inflate values by pricing higher, while a buyers’ market tries to deflate values with lower prices. The value of unsold homes is impacted by real estate trends. Current listings will give you a good idea of what your competition is like.
Consider Pending Listings of Comparable Homes
Pending listings have not fully closed yet, however, looking at these listings will give you real time insight into how the market is doing.
Look at Expired Listings of Comparable Homes
The last thing you’ll want to look at is expired listings of similar homes. This is extremely valuable information for your market
analysis because usually properties that have expired were priced too high.
Sources to Gather Real Estate Analytics
You might be asking yourself, where do I find all of the information I need for my comparative market analysis? The following are good resources to find the analytics you need:
- The Federal Housing Finance Agency (FHFA). This website has data on recently sold properties within specific regions.
- The FNC Residential Price Index. Data from more than 20 metropolitan areas that are based on home appraisals. This index also helps buyers and sellers understand current market trends.
- Real Estate Websites. Popular websites like, Zillow, Trulia, and Redfin are great for checking prices of active listings or recently sold properties.
Calculate average price of comparable listings
With this information in hand, the next step is to create a spreadsheet for all seven properties – your subject property (the one you’re thinking about buying), the three recent sales, and the three homes actively on the market for sale.
Your first column should list each house by address. Then, create individual columns for specific features and amenities:
- Selling or listing price
- Square feet
- Number of floors
- Elevation
- Age of house
- Bedrooms
- Bathrooms
- Kitchen upgrades
- Bathroom upgrades
- Recreation room or bonus areas
- Enclosed patio or sunroom
- Basement
- Attic
- Water heater and furnace condition
- Central air-conditioning and age
- Roof age, condition, and roofing materials
- Garage, carport, or on street parking
- Swimming pool
After you’ve filled out your spreadsheet, calculate the average price per square foot for each of the seven houses.
Determine a Price Range
Now that you have compiled a list of all the necessary information, it’s time to determine a price range for your property.
Set Your Ceiling Value
Choose one property from the three to five comps you found, that is definitely worth more than yours. The property may be on a better street, offers more features or is newer. This number will be your ceiling value – or at the top of your price range.
Set Your Floor Price
Then pick a property that is definitely worth less than yours. Maybe it is located on a busy street, has fewer features, or less desirable curb appeal. This number will be your floor price – or the bottom of your price range.
Fine-tune your market analysis with adjustments to your comparables
Every piece of real estate is unique, so the odds are that not every home on your list of comparables has the exact same features and amenities.
To make sure you’re comparing apples-to-apples, you’ll need to make adjustments to your comparables. An adjustment is something that adds or subtracts value from your subject property.
By using the spreadsheet format you’ll be able to see a pattern of how the specific features and amenities of each house affect the sales or listing price, and the price per square foot.
For example, because swimming pools and newer roofs can add value, the price per square foot may be higher. Homes with only 2 bedrooms will be worth less than 3 bedroom homes, and property with an old roof or outdated heating and cooling system will have less value than a house with recently updated equipment.
When you’re finished making adjustments to your comparables, recalculate the price per square foot. This will give you an accurate idea of the fair market value of your subject property.
Assess the Home in Person
There is no better way to accurately price a home than to assess it in person, if possible. When walking through the property, take note of factors that will impact value, such as: overall condition, any additions or upgrades, amenities, features, necessary upgrades or repairs, as well as the exterior and landscaping.
Put your team to work
Now that you have a good idea of what the house is worth, your final step is to get the ball rolling and put your local market real estate team to work.
Have your local real estate agent or property manager visit the property. If you’re still building your team, check out Roofstock’s partner community.
Your boots-on-the-ground team should pay close attention to curb appeal, landscaping, neighboring houses, overall property condition, and the need for any immediate repairs or updating. Out-of-state investors can also use Google Maps or local companies that provide aerial drone video and photography services.
Also, compare the data on your market analysis to the actual features and amenities of the subject property and the information from your property inspection report. Mistakes can and do occur on listings and even county assessor websites.
Decide the Market Value
Based on all your research, you should have a price range for what your property is worth. Take into account everything you observed while walking through the home and how it will impact the value. Then, take the selling prices of the comparable homes on your list, divide that price by their square footage, and get the price per square foot for each home. Once you have calculated the average price per square foot of your comps, multiply that by the square footage of the home you are trying to sell or buy.
Conclusion
The market analysis will be benefited by developing a report that compares and contrasts two enormous real estate markets in the US, while analyzing the overall business climate. This will require extensive research of the current developments in this industry, including changes in financing regulations, tax structures, property laws, construction costs, etc. It will also require acquiring information on the different types of property that are being built or planned for development.