Whether you want to sell a house quickly or keep it for a while, you need a good real estate market analysis to be successful. Take note that this is more than just comparing similar properties, although that’s also an important step! You need to learn a lot about the local real estate market to make sure that your “diamonds in the rough” can stand up to close inspection.

During a market analysis, you’ll look at things like the area’s economy, jobs, schools, and even the environment. You should look at the social, technological, and political issues in your area and decide if they fit with your personal and financial goals.

In the process, you’ll make a scorecard to compare the pros and cons, opportunities, and risks of different real estate markets. Whether you want to invest in Tampa or Seattle or are trying to choose between the two, you need to do a proper market analysis.

If all of this seems too much, don’t worry. This guide shows you how to do a market analysis, which will help you decide if a particular property fits your investment goals. 

Why Do A Market Analysis

There are many reasons to do this kind of research, but the main one is to get information that will help you make safe investments and purchases. Some other reasons are:

• To figure out if you should put your money in one city instead of another.
• To figure out what stops people from investing in certain places.
• To know about demographics so you can figure out how the area you want to invest in is changing.
• To find out about investment projects in certain areas and to find out if there will be a change in the future that will make the properties worth more.
• If you know how much homes sell for on the market, you will always be able to negotiate a lower price and not pay more than the property is worth.

How To Do A Good Real Estate Market Analysis

Before you start gathering information, you need to have a clear idea of where you want to stand in the market: type of goods or services offered, type of market (individuals, businesses, governments, etc.), the geographic area targeted, etc.

A well-defined market is an important place to start if you want to do a helpful study.

Doing a real estate market analysis is the same thing as doing a property analysis. The area and neighborhood, the size of the lot, the time it takes to build, the services and amenities, and other things should be looked at.

Evaluate the original price: After you’ve done the property analysis, try to find the actual listing online, if you can. This will tell you a lot about how the house is in general. Check the photos and descriptions for any changes, renovations, or things that could go wrong.

Verify property value estimates: Use online tools to determine how much the house is worth on the market. Since these are estimates of market value, they may not be completely accurate, significantly if the home has been changed. But this will give you a good starting point for your research into the real estate market.

Comparisons: Compare the property to others in the same area. Size, price, and other factors will help you figure out how much it’s worth.

Decide the market value: Based on what you’ve learned, you should have a range of prices for how much your property is worth. Think about what you’ve seen and figured out and how that will affect the value.

To do a study, you can either do your own market research or hire someone to do it for you.

How To Conduct An Effective Market Analysis

1. The very first thing that you need to do for your market analysis is to look at the property. You have to look at a wide range of objective and subjective things about your property, such as:

• Place and community
• Size or number of square feet
• Size of the land 
• How many bedrooms and bathrooms
• Other spaces
• How many floors
• Age of construction: Things like a swimming pool, a garden, a fireplace, a balcony, a veranda, etc.
• Placement concerning roads, stores, public transportation, schools, etc.
• Recent improvements

2. After that, you will have to find a few recently sold homes in your area that are similar to yours and that are in the same price range. We suggest you look at past listings from 1 to 3 miles away from your property. 

It would be best to start with homes that have sold in the last three months and, if necessary, go back six months. For your market analysis, you should try to find a few comparables, or “comps,” which are properties that are like yours in size, age, location, and other ways. 

3. Then, look for current listings of homes that are like the one you want. Again, look at homes that are between 1 and 3 miles away from yours and find at least three that are similar to yours. Be careful. When looking at active listings, remember that the prices listed are estimates, not always the actual values. 

Many sellers have high hopes for their homes, so they list them for much more than they are worth. Real estate trends have a significant impact on the value of homes that haven’t sold yet. Most of the time, the sellers’ market tries to raise prices, while the buyers’ market tries to lower them. So, you should only use active listings to add to the values of recently sold homes.

4. You should also consider pending listings and deals that have been made but not yet closed. In your real estate market analysis, you can get a good idea of how the market is doing right now by looking at pending listings.
5. Look at expired listings. These will help you with your market analysis in a way you can’t do without. Most of the time, an ad will expire because the price is too high. If there have been expired listings for homes like yours, you probably shouldn’t ask for as much as they did.
6. Once you have all the information you need, pick one of the 3–5 comparable properties that are definitely worth more than yours. Maybe it’s in a better place (away from a noisy street, near a bus stop, or next to a park), has better features (like a nice view), or is a newer building. Use this as your top limit.
7. Then, choose a property that is definitely worth less than yours. This will then be the minimum price.
8. You nw have a range of prices, and the market value of your home should be somewhere in this range. The next step would be to look at how your property compares to the ones you’ve chosen. Think about the size, age, amenities, upgrades and renovations, features that are important to you, and location. Check out the outside of the homes that have been sold and the areas where they are.

9. Finally, you have to figure out where your home fits in the range of selling prices for the comps you chose. This is how much your house is worth on the market.