How to do a Real Estate Market Analysis?

A real estate investor is easy to get trapped by a pool of gimmick-agents if he lacks the insights from the market trends. To make sure that the property you are investing in or are selling is fairly-priced, analyzing the real estate market of the targetted area carries primary importance. This will lead you to a comparatively informed decision. Before diving into the steps of performing this analysis, let’s define what market analysis in the real estate industry actually refers to.

Real Estate Market Analysis

The comparison of ongoing market values of properties with the property you are looking to buy or to sell is what we call real estate market analysis or comparative market analysis (CMA). 

Why is it necessary?

Although you can hire an agent to do the analysis for you, but who is going to supervise that agent? That is you! And, this is why you need to perform a short market insight survey using the following information and a property portal before you invest your hard-earned money. 

Market Analysis is an indispensable step particularly for the sellers who are deciding the accurate numerics of their sellable property’s price-tag.

A Real Estate Market Analysis helps you with the following:

  • Understand the current housing market situation
  • Do an easy comparison of your property to alike property price-tags in your area
  • Accurately price a home

Step#1: Evaluate the property

You can hop onto the online portal that covers your area to have an idea about the versatility of options you have. Mostly, people trust for their online property searches and for market analysis as there is around 0.46+ million property listed under the categories of homes, plots, commercial property, agricultural lands, industrial lands, and more. Moreover, if there is a particular reputable dealer or property agent in your mind, you can also find their properties listed in the category tab of dealers. 

In neighborhoods, Explore Latest Property Listings through

Look for the following characteristics in the under-consideration property:

Area: Large area properties have higher costs.

Architecture: A Well-designed house costs higher than a haphazardly designed one.

Construction Age: (If it is a constructed house): Look for how old is the house.

Location: Address the question of the house’s location; If located in a posh area, it will cost higher than the one located in the outskirts of a city.

Facilities: Security, Access to Amenities, etc- Does the house has these nearby?

Step#2: Assess the Real Listing Price

Completing the first step has taken you through half the process. Now, you have a mindmap of the evaluated factors and you are well-informed of the parameters that are affecting the value of your prospect property. To work out the real listing price of this property is your next goal. On the online portal go through the online captures, videos, and virtual tours listed there. Scroll up and down through multiple listings of the same kind to know the actual bracket space in which your targetted property will lie. Read the descriptions, pen them down in your brain, and form an opinion through the stats you access. It is a plus point if you are able to reach directly the owner or dealer of the property to know if the home was custom-built or is a cookie-cutter version of some existing sample.

Step#3: Clear Your Mind through Consultations

For a good and easy process do consider online estimation calculators that are not-so-accurate but will help you clear most of your cloudy thoughts about the prices. 

You can also make calls to some dealers connected to that area- Again a crucial step to form a comparative analysis file in your head.

Step#4: Form your Price Domain

We are almost done. With all the information you have gathered, now it is time to define the ceiling-to-floor range of the property under consideration.

Paper house attached to yellow blank price tag on blue background ...

Define Your Ceiling Value

Sideline 1 property out of a similar set of 3-5 comparisons that is worth more than yours. This is your ideal case property and is the best you can get according to your requirements. This property defines your ceiling price limit.

Define Your Floor Price

Pick an option that is lesser in worth than your target property. Some factors like curb appeal, location, etc may be compromised in this one. The price of this one is going to be your lower price limit or floor value.

Now you have designed the price bracket of your property.

Step#5: Conclude your Analysis through a Site-Tour

Skim out the best and intermediate cases laying in the price bracket you have concluded in the last step. Walk through them, make notes of the factors that can affect the prices: curb appeal, interiors, architecture, features, landscaping, repairs, and maintenance point- note them all.

Consider this Case:

Let’s say your property is 7 Marla and after researching you have 3 comparable homes:

Home 1: 5 Marla House in DHA Lahore  priced at Rs. 13 million

Home 2: 8 Marla House in DHA Lahore priced at Rs. 18 million

Home 3: 10 Marla House in DHA Lahore priced at Rs. 21 million

The average price per marla of these 3 comp constructed homes is 2.3 million. Multiply it with your property’s area (7 Marla). You land at a value of Rs.16.1 million. This is a pretty accurate estimate of how your home should be priced.

The above steps are essential for a seller to follow so avoid over-pricing his home, leading to a prolonged selling process. Also, this info is equally crucial for a buyer to grub away the extras attached to the prices of the property being offered to him.

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