We’ve been going to a local Real Estate Investor Association meeting for almost a year now. The Real Estate Investor Association is a community of Real Estate Investors with a long history of success. A lot of these investors have been doing this a long time and have a lot of great advice to offer new investors like us, as well as each other. I enjoy these meetings not only for the advice, but also because of how it open’s my mind to new things that I don’t normally think of such as this market analysis example. This article will be about how to write a great Real Estate Market Analysis Example.
Let’s talk real estate market analysis example. This resource will teach you how to analyze your local real estate market for making investments in the right areas where the most potential buyers are.
A real estate market analysis is often called a comparative market analysis (CMA). It’s basically an analysis of the current market values of properties, comparable to a property you are looking to buy or sell. A CMA is a helpful tool to determine the market value of your own property, especially if you are trying to decide an accurate selling price prior to listing.
Something important to note is that a real estate market analysis is different than an appraised value, which is determined by a professional appraiser. A comparable market analysis is considered subjective and gives the seller information on the value of similar houses in the area.
While there are many factors to take into account when performing a real estate market analysis, it is completely manageable with an organized approach.
Your real estate agent may conduct a CMA for you to determine what price to list when selling or a price to offer when buying a home. Because no two properties are exactly the same, adjustments must be made to account for differences.
Why Should I Do a Real Estate Market Analysis?
You should always do a real estate market analysis, whether you are buying or selling a property and I’ll explain why. This analysis will help you understand the current housing market, how much properties similar to yours are worth, and if it’s an investment property, how much you can charge for rent.
The information gathered through a real estate market analysis or CMA helps the seller choose a listing price and helps buyers see if the asking price is too high, low or reasonable. A CMA should always be conducted to make sure both buyers and sellers are getting a fair deal, based on the value of the property.
By comparing similar properties on the market, you will be able to accurately put a price on a home.
A real estate market analysis is often called a comparative market analysis (CMA). It’s basically an analysis of the current market values of properties, comparable to a property you are looking to buy or sell. A CMA is a helpful tool to determine the market value of your own property, especially if you are trying to decide an accurate selling price prior to listing.
Something important to note is that a real estate market analysis is different than an appraised value, which is determined by a professional appraiser. A comparable market analysis is considered subjective and gives the seller information on the value of similar houses in the area.
While there are many factors to take into account when performing a real estate market analysis, it is completely manageable with an organized approach.
Your real estate agent may conduct a CMA for you to determine what price to list when selling or a price to offer when buying a home. Because no two properties are exactly the same, adjustments must be made to account for differences.
Why Should I Do a Real Estate Market Analysis?
You should always do a real estate market analysis, whether you are buying or selling a property and I’ll explain why. This analysis will help you understand the current housing market, how much properties similar to yours are worth, and if it’s an investment property, how much you can charge for rent.
The information gathered through a real estate market analysis or CMA helps the seller choose a listing price and helps buyers see if the asking price is too high, low or reasonable. A CMA should always be conducted to make sure both buyers and sellers are getting a fair deal, based on the value of the property.
By comparing similar properties on the market, you will be able to accurately put a price on a home.
You don’t always need a real estate agent to understand the market
While asking a real estate agent to do a market analysis for you has some advantages, there are also some big drawbacks as well.
For example, the agent may not have the deep experience and specialized training needed to work with rental property investors. Or, the real estate agent may be so wrapped up in day-to-day market activities that they’re simply unable to see the big picture that real estate investors rely on for success.
Fortunately, there are several great ways to get the information you need to do a real estate analysis on your own.
Look at historical data first
Before you can understand where the market is going, it’s important to understand where it’s already been. Reviewing online real estate market performance reports from Zillow or the National Association of Realtors (NAR) make it easy to learn what’s been selling and for how much.
Dig deep into your target market and neighborhood
Once a specific strategy has been selected for each market, investors should immerse themselves in everything there is to know about the area.
A great resource for in-depth real estate market information are the Roofstock market summaries. You’ll find everything you need to know arranged in an easy-to-understand format, including:
- Market overview
- Data on population and job growth
- Major employers and workforce education levels
- Local housing market activity for the city and metro area
- Past, current, and future market trends for rental property
- Quality of life rankings to help predict future demand for real estate
Use multiple sources to gather unbiased data
By using the internet to gather transparent data from multiple sources, you’ll filter out the built-in bias that some people within that market might have.
Resources rental property investors use to gain a broad perspective of the local real estate market include:
- Local newspapers
- Community websites
- Social media
- Investment clubs
- Online investment portals
Understand how market factors affect investment strategy
The most successful rental property investors choose markets that best fit their investment strategy.
For example, investors focused on cash flowing rental property may find Birmingham or Pittsburgh an excellent match for a long-term buy-and-hold strategy. On the other hand, real estate investors looking for rapidly-rising home prices are opting to invest in markets such as Atlanta and nearly every city in Florida.
Some of the key factors to consider when analyzing a real estate market include:
- Property types with the greatest demand
- Most active agents and investors
- Who the local home wholesalers are
- Percentage of renter-occupied households
- Housing inventory stock
- Where the biggest employers are located
Importance of a Real Estate Market Analysis
Whether real estate investors are lacking the skills and knowledge it requires to complete a market analysis not only for their client but also for their own reference, or just fail to understand its benefits, in truth, it is the most important part in the process of evaluating a real estate investment. The market analysis makes up the foundation for whatever calculation and decisions follow after, so doing an extensive research and having a good understanding of the current market in a certain location is very crucial to a good decision-making. You may also see sample real estate marketing plan.
The real estate market analysis is also important to help you determine the real value of the property you invested on, including its rental income if you should lease or rent it out, or if you are going to become a tenant. In other words, in a renting market, it can also help you figure out a price list for charging rent or for accepting a certain renting rate of a potential landlord. It is also very important in getting a good listing price for your house or property if you consider yourself a real investor who wants to bank on purchasing real estate properties and selling them out to gain profits. You may also see competitor analysis templates.
But of course, you have to keep in mind that whatever the current listing prices are in the market, they’re not 100% accurate as they depend on estimations. Most of the time, the sellers’ end of the market tries to get the highest prices. The buyers’ market o the other hand, prefers the lowest prices when it comes to property value. You may also see marketing analysis templates.
Conclusion
A market analysis for your real estate business is one of the most important tools in your arsenal for being successful in this business. If done properly it will provide you with a comprehensive picture of not just your local area, but you can often times see the ripple effect of the bigger real estate markets. Today I am going to be showing you just what a proper market analysis report looks like along with some different items that are taken into account when doing one. For our example, we are going to use the town of Oakville, Ontario Canada that is located right on Lake Ontario.