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How to Conduct Real Estate Market Research Like a Pro

Conducting real estate market research is a considerably different feat than conducting any other kind of market research . This is because this vertical, by its very nature, is packed with market intelligence that can be applied not simply to real estate companies, but to buyers and agents, along with those looking for a new property.

Therefore, as a business, you’ll find a lot of overlap between business-facing research and research that the target market can stand to study. However, even when you come across information that seems more suitable for consumers to review, it is of high value to your business as well.

Why? Because it is crucial to tap into the minds of your target market, to see exactly what they’re presented with. This intel will also grant you comparisons between your own offerings and those in the real estate market. 

The Main Uses of Real Estate Market Research

Research for the real estate vertical can be used for a variety of purposes. The chief goal of market research for this industry is to discover if your business will be successful in a particular location.

Unlike other industries, real estate has an enormous focus on location and the brick and mortar aspect. It is self-explanatory as to why that is, nonetheless, getting a deep understanding of your target market is also essential.

Here are the key uses of market research for this sector:

• To understand changes and trends in the real estate market at large
• To understand the current housing/ space rental markets
• To compare prices of similar properties with yours
• To be informed on how much you can charge for rent (particularly for investment properties)
• To gauge your own prices as reasonable, too high or too low
• To be able to market your properties successfully (gain better reach, prospects and sales)
• To choose the proper investments

How to Conduct Real Estate Market Research 

The following lists the necessary steps towards conducting a sufficient market research campaign within the real estate market. You’ll notice that this vertical demands doing an analysis on various elements. These remain constantly in existence in the sector, so it is critical to understand how to study each.

You’ll also notice that observing your target market doesn’t occur at a single step, rather it should be done in a variety of stages.

Step 1: Narrow down a region/neighborhood 

Since real-estate is location-based, you must first settle on a region or a neighborhood you are interested in serving. If you are undecided, consider a few areas that you’d like to learn more about. 

Identify the target market of your neighborhood. You can do so via secondary research, by finding the demographics of your intended neighborhood. There are several sources that fetch this data, including Neighborhood Scout , Census demographics data, for example for New York City and Movoto .

Aside from gleaning the target market, these tools gather other key info like crime, local schools and even real estate data. 

Step 2: Study Your Competition 

Once you have narrowed down a few neighborhoods to research, along with their respective target markets, it’s time to focus on the competition.

That means looking further into secondary sources. To do so, check for websites that provide real estate agent, vendor, supplier information in specific localities. BiggerPockets and   Parkbench neighborhood marketing platform , for example, provide information on local real estate agents and vendors.

As for a neighborhood itself, look into The Federal Housing Finance Agency (FHFA) . This website provides data on recently sold properties in specified areas.

You can also check The FNC Residential Price Index . This platform features exhaustive and up-to-date data on the real estate market from public records and valuations. This index also shines a light on market trends.

Step 3: Observe Your Desired Neighborhoods

Aside from looking at your direct competitors in the particular neighborhoods you set your sights on, you should also look into each neighborhood’s supply. This refers to the number of properties currently on offer in the neighborhoods. 

Then, you’ll need to find how in-demand a particular neighborhood is. To find this, you’ll have to survey your target market, or even the broader market of consumers seeking to find a residence or space to move into.

If you survey your target market, you can get their opinions about moving into a neighborhood. The more responders who prefer a neighborhood, the more expensive its properties become. In short, demand dictates the competition of a region.

As part of your neighborhood observation, peruse several listings of the available properties, office space, apartments, or whichever real estate is most relevant to you. Pay attention to the prices in particular and compare them with your existing ones, or the ones you set out to charge.

This will give you a real-world view of pricing and pricing expectations of your target market.

Step 4: Analyze the physical elements of a neighborhood/property

Analyzing the properties of a neighborhood and the real estate you seek to sell requires not merely examining the physical properties of a home. Rather it also involves inspecting public utilities and services, along with general environmental aspects.

Here are the most pressing aspects to inspect that affect a property’s standing:

• Water resources
• Transportation in the area
• Regional climate
• Utilities offered and their functionality

Afterward, you will need to inspect the property itself.

• Size and square footage
• Number of rooms (bedrooms, bathrooms, other rooms)
• Age of properties (newer buildings tend to have a higher value)
• Amenities (decks, fireplaces, gardens, balconies, etc.)
• ANy recent or noteworthy improvements/ restorations

Step 5: Gauge how the neighborhood has been faring

After you examine the physical characteristics, you should get a deep read of how the neighborhood has been faring. This includes delving into the economics, construction and business performance of the region. 

When developments are underway, they could impact a neighborhood’s properties. At times, they may incite new companies to arrive in the region. Some may impact the local economy positively, while others may worsen it. 

An uptick in commercial real estate is usually a sign of a healthy local economy. This will stoke the interest of buyers and with more sales, the cost per property square foot will be on the rise.

Research the demographics of the neighborhood. This will allow you to be clued in to the target market as well as giving your buyers more insights. An elderly population, for example, is great to highlight to retirees and others within this age range.

But perhaps younger buyers are seeking a neighborhood with other young professionals.

Moreover, age and ethnicity are not enough to determine how a neighborhood will fare — and neither how your business will either. You’ll need to understand your target market at a deeper level.

That is where surveys rear their usefulness again. A survey with the right questions will give you all the answers you need to understand how to best appeal to your target market. It can also give you more insight as to the price and style of real estate your consumers are seeking. 

A Wavering Market 

The real estate market is notorious for its rising costs, whether they concern rent or ownership. Unfortunately, this market has also been under the mercy of rocky times, such as the Great Recession and the Covid-19 pandemic. They have negatively affected sales and demand, especially for urban areas such as New York City .

Due to an exodus from Covid-19 hot spots, which were mostly urban, (at least early in the pandemic) suburban real estate has soared.  

Frequently asked questions

What is market research.

Market research is the process of gathering information about target customers and markets in order to improve or introduce a product, feature, or service.

What is the goal of real estate market research?

The main goal of real estate market research is to understand if a real estate business will succeed in a specific location.

What factors should be considered while conducting real estate market research?

During a real estate market research project, you should seek to understand the following: changes in the market as a whole, current demand for and pricing of housing or commercial space, how your own prices compare to market averages, and current real estate marketing trends.

How can surveys be used during real estate marketing research?

A survey can provide real-time insight into market demands such as pricing, style, and how to appeal to your target audience.

How can demographics be used to plan marketing efforts?

By understanding the demographics of a target location, you can better understand the types of housing the population requires, their price points, and how to market to the various segments.

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Real Estate Market Research: A How-To Guide

What is Market Research in Real Estate?

The Importance of Researching a Real Estate Market

How To Start Researching Your Real Estate Market

Tools and resources for in-depth research.

The real estate sector holds immense potential for long-term gains and financial security. However, one can’t emphasize enough the importance of thorough real estate market research. Without it, you’re essentially navigating without a compass. This guide is designed to lead you through the crucial steps of conducting comprehensive real estate market research that could make your venture well worth the work.

Before diving into the how-to’s, it’s essential to understand what market research in real estate actually involves. At its core, real estate market research is the systematic gathering, analysis, and interpretation of data related to property markets. This could encompass a wide range of factors like property values, rental rates, market trends, and consumer preferences. The goal is to obtain actionable insights that inform your real estate investment decisions, ensuring that you are making choices based on real data rather than just intuition or hearsay.

The Importance of Real Estate Market Research

Real estate market research is the cornerstone of any successful real estate venture . It’s akin to laying a strong foundation before you build a house. Neglect it, and you risk wasting both time and resources. According to data from the U.S. Bureau of Labor Statistics, approximately 20% of new businesses fail within the first two years, largely due to lack of proper research and planning. In real estate, these percentages can be even more daunting. Here’s why researching the real estate markets you plan to invest in can be so critical to your success:

Financial Benefits

Conducting diligent real estate market research can significantly improve your Return on Investment (ROI). Knowing where to invest, what type of property to invest in, and how much to invest are all answers derived from proper market research.

Risk Mitigation

The aim here is to reduce uncertainty. Investing without adequate research is akin to gambling your hard-earned money. Understanding market trends, property values, and neighborhood demographics can greatly mitigate your financial and strategic risks.

Embarking on real estate market research may seem like a daunting task, especially if you’re new to the industry. However, breaking it down into actionable steps can make the process more manageable and effective. Here’s a numbered guide on how to begin your research:

Define Your Objectives: The first step is to articulate what you aim to achieve with your real estate investment. Are you interested in residential properties for rental income, or are you leaning towards commercial real estate? Your investment goals will shape the kind of research you’ll need to conduct. Writing out a real estate business plan is a great way to define your goals.

Choose Your Location: Picking the right location is crucial. Each market has its own set of characteristics—growth rate, property taxes, rental yields, and more. Make sure to choose a location that aligns with your objectives. For instance, if you’re looking for rental income, consider areas with high rental demand like cities with universities or growing job markets.

Gather Basic Data: Start by collecting fundamental data points like average property prices, market trends, and rental rates in your chosen location. Websites like Zillow or local real estate agencies can provide this information. This initial data serves as the groundwork for your subsequent, more detailed research.

Identify Market Indicators: Dive deeper by identifying key market indicators like vacancy rates, neighborhood development plans, and employment statistics. Data from the US Census Bureau can be particularly helpful here. These indicators will give you a more rounded view of the market’s health and potential.

Study The Competition: Understand who your competitors are. Are there a lot of new developments coming up? What are the average rental or selling prices in those? This will help you gauge market saturation and potential profitability.

Utilize Online Tools: Make good use of online tools and platforms specifically designed for real estate market research. Websites like Realtor.com and various real estate investment apps offer in-depth analysis and data sets that can aid in your research.

Consult with Professionals: Before finalizing your research, consult with industry professionals. A local real estate agent can offer valuable insights that are not available through online resources. Financial advisors can help evaluate the financial aspects of your prospective investment.

Assemble Your Findings: Finally, compile all the data and insights you’ve gathered into a cohesive report. This will serve as a roadmap for your real estate investment journey, helping you make informed decisions.

In today’s interconnected world, technology has made the task of conducting real estate market research considerably easier. With a wealth of online tools and resources, you can dive into data and trends more deeply than ever before, enriching your understanding and enhancing your investment strategy.

Online Portals

Websites like Zillow , Redfin , and Trulia serve as treasure troves of information. These platforms offer not just property listings, but also valuable insights into market trends, comparable home prices, neighborhood reviews, and historical sales data. You can filter your search according to various criteria, such as property type, price range, and geographic location, making these online portals incredibly user-friendly and tailored to your specific research needs.

Local Government Records

Don’t underestimate the value of local government records and databases. You can find detailed tax assessments, property ownership histories, public infrastructure plans, and even future zoning changes that could affect your investment. Most of this information is freely available to the public and can be accessed through county or city government websites. These records provide a ground-level view of the local market conditions and can offer data that are more current and specific than generalized online portals.

Real Estate Agents and Brokers

While digital tools are indispensable, human expertise adds a layer of depth to your real estate market research that shouldn’t be overlooked. Real estate agents and brokers who have been working in a particular area for years possess nuanced insights into local markets that you won’t find in any database. They can tell you about the less obvious aspects that might affect property value, such as neighborhood safety, community vibe, and even the reputation of local schools. So, consider hiring a local agent to complement your online research.

Financial Tools

Financial analysis is an integral part of real estate market research. For this, platforms like Microsoft Excel or specialized real estate investment software can be incredibly useful. These tools help you in creating various financial models to evaluate potential ROI, cash flow projections, and risk assessments. By inputting different variables, you can simulate numerous scenarios to see how each one would affect your investment outcome. This enables you to make more informed decisions, backed up by robust financial analysis.

Investing in real estate is not a decision to be taken lightly, and it starts with comprehensive real estate market research. This guide was designed to walk you through the critical steps of this crucial preparatory stage. The real estate market is rich with opportunities designed to help you succeed, but it’s up to you to take the first step. Real estate market research isn’t just an option; it’s a necessity. Make this investment of time and effort, and it could pay dividends for years to come.

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Real Estate Market Research: A Comprehensive Guide

Welcome to our comprehensive guide on real estate market research. Whether you are a seasoned real estate investor or a first-time homebuyer, understanding the importance of market research is crucial for making informed decisions. In this blog post, we will take you through the steps involved in conducting effective real estate market research, explore the tools and techniques available, provide a case study of successful research, and highlight common mistakes to avoid. By the end of this guide, you will have a solid understanding of how to navigate the complex world of real estate market research and make informed decisions that can maximize your investment potential. So let's dive in and unlock the secrets of successful real estate market research!

Understanding the Importance of Real Estate Market Research

Real estate market research is the foundation for making informed decisions in the real estate industry. Whether you are a real estate investor, developer, or homebuyer, understanding the importance of conducting thorough market research is essential for success. In this section, we will explore the key reasons why real estate market research is crucial and how it can benefit you.

1.1. Identifying Market Trends and Opportunities

One of the primary reasons to conduct real estate market research is to identify current and emerging market trends. By analyzing data and market indicators, you can gain valuable insights into the direction of the real estate market in a specific area. This information allows you to identify opportunities for investment, whether it's in residential, commercial, or industrial properties.

1.2. Assessing Demand and Supply Dynamics

Market research enables you to assess the demand and supply dynamics in a particular real estate market. By understanding the demand for certain types of properties, you can identify areas where there is an undersupply or oversupply. This knowledge can guide your investment decisions, allowing you to focus on markets where there is a high demand and limited supply, maximizing your potential returns.

1.3. Evaluating Market Value and Pricing

Accurate valuation of real estate properties is crucial for making informed buying or selling decisions. Market research provides you with the necessary data to evaluate the market value of properties based on factors such as location, property type, amenities, and market conditions. Understanding the pricing trends in a specific market can help you negotiate better deals and avoid overpaying or underselling.

1.4. Mitigating Risks

Real estate market research helps mitigate risks associated with property investments. By analyzing market trends, you can identify potential risks such as market fluctuations, economic downturns, or oversaturated markets. This information allows you to make informed decisions and implement risk management strategies to protect your investments.

1.5. Supporting Decision-Making

Market research provides you with the necessary data and insights to make informed decisions in the real estate industry. Whether you are considering investment opportunities, evaluating potential development projects, or deciding on the purchase of a property, market research guides your decision-making process. It helps you weigh the pros and cons, assess the potential returns, and make strategic choices that align with your goals.

1.6. Gaining a Competitive Edge

In a competitive real estate market, having access to reliable market research gives you a competitive edge. By staying informed about market trends, demand and supply dynamics, and pricing patterns, you can make decisions faster and more confidently than your competitors. This allows you to seize opportunities before others, negotiate better deals, and position yourself as a knowledgeable and trustworthy player in the market.

Understanding the importance of real estate market research is the first step towards becoming a savvy investor or buyer. By harnessing the power of market research, you can make informed decisions, mitigate risks, and maximize your potential returns in the dynamic world of real estate. In the next section, we will delve into the step-by-step process of conducting real estate market research.

Steps to Conduct Real Estate Market Research

Conducting effective real estate market research involves a systematic approach that encompasses various steps. In this section, we will guide you through the essential steps to conduct comprehensive market research in the real estate industry. By following these steps, you will gather valuable insights and data to inform your investment decisions. Let's explore each step in detail:

1. Define the Purpose and Objectives

Before diving into market research, it's crucial to clearly define the purpose and objectives of your research. Ask yourself what specific information you are seeking and what decisions you need to make based on that information. Are you looking to identify investment opportunities, evaluate market trends, or assess the feasibility of a development project? Defining your purpose and objectives will help you focus your research efforts and gather the most relevant data.

2. Identify Target Market

Once you have defined your purpose, it's important to identify your target market. Determine the specific geographic area or property type that you want to focus on. For example, you may be interested in residential properties in a particular neighborhood or commercial properties in a specific city. By narrowing down your target market, you can gather more specific and accurate data.

3. Collecting and Analyzing Data

The next step is to collect and analyze data related to your target market. There are several sources of data you can utilize, such as government reports, real estate listings, local housing market reports, and demographic information. Collect data on factors such as property prices, rental rates, vacancy rates, population growth, employment rates, and infrastructure development. Use statistical analysis and data visualization techniques to gain insights from the collected data.

4. Interpreting the Results

Once you have gathered and analyzed the data, it's time to interpret the results. Look for patterns, trends, and correlations within the data to gain a deeper understanding of the market dynamics. Identify any key findings or insights that can inform your investment decisions. For example, you may discover a rising demand for rental properties in a specific neighborhood, indicating a potential investment opportunity.

5. Making Informed Decisions

Based on the insights gained from your research, it's time to make informed decisions. Evaluate the risks and rewards associated with potential investment opportunities. Consider factors such as market trends, demand and supply dynamics, pricing patterns, and potential risks. Use the collected data and analysis to assess the viability and profitability of your investment options. Make decisions that align with your goals and risk tolerance.

Conducting real estate market research is a systematic process that involves defining objectives, identifying the target market, collecting and analyzing data, interpreting the results, and making informed decisions. By following these steps, you can gather valuable insights and data to guide your real estate investment journey. In the next section, we will explore the tools and techniques available for conducting real estate market research.

Tools and Techniques for Real Estate Market Research

To conduct effective real estate market research, it is essential to utilize the right tools and techniques. In this section, we will explore various tools and techniques that can enhance your market research efforts and provide valuable insights. From real estate analytics tools to surveys and competitive analysis, let's delve into the tools and techniques available for conducting comprehensive real estate market research.

1. Real Estate Analytics Tools

Real estate analytics tools are powerful resources that provide in-depth data and analysis on the real estate market. These tools utilize algorithms and data mining techniques to gather and interpret large sets of real estate data. They can provide valuable information on property prices, market trends, rental rates, historical data, and more. Examples of popular real estate analytics tools include Zillow, Redfin, Realtor.com, and CoreLogic. By leveraging these tools, you can gain a deeper understanding of the market dynamics and make informed investment decisions.

2. Surveys and Interviews

Surveys and interviews are valuable techniques for collecting primary data and gaining insights directly from potential buyers, sellers, investors, and industry professionals. By developing well-designed questionnaires or conducting interviews, you can gather information on preferences, buying behavior, market perceptions, and more. Surveys and interviews can be conducted online, in person, or through telephone interviews. These methods allow you to gather qualitative and quantitative data that can supplement your market research efforts and provide a deeper understanding of market dynamics.

3. Competitive Analysis

Competitive analysis involves studying and evaluating your competitors in the real estate market. By analyzing their strategies, pricing, marketing efforts, and market share, you can gain insights into the competitive landscape and position yourself strategically. Look for information on competing properties, their features, amenities, pricing, and market positioning. This analysis helps you understand the strengths and weaknesses of your competitors and identify opportunities to differentiate yourself and gain a competitive advantage.

4. SWOT Analysis

SWOT analysis is a strategic planning technique that assesses the strengths, weaknesses, opportunities, and threats related to a specific real estate market. By conducting a SWOT analysis, you can identify the internal and external factors that impact the market and your investment decisions. Evaluate the strengths and weaknesses of the market, such as infrastructure, job growth, and property inventory. Identify opportunities for growth and potential threats, such as economic downturns or regulatory changes. This analysis provides a comprehensive overview of the market and helps you make informed decisions.

Utilizing the right tools and techniques is crucial for conducting comprehensive real estate market research. Real estate analytics tools, surveys, interviews, competitive analysis, and SWOT analysis are just a few examples of the tools and techniques available. By leveraging these resources, you can gather valuable insights, analyze market trends, and make informed decisions in the dynamic real estate market. In the next section, we will explore a case study of successful real estate market research to understand how these tools and techniques can be applied in practice.

Case Study: Successful Real Estate Market Research

In this section, we will examine a case study of successful real estate market research to understand how the tools and techniques discussed earlier can be applied in practice. By exploring a real-life example, we can gain insights into the process, methodology, findings, and outcomes of effective market research. Let's dive into the case study and learn from its success.

1. Identifying the Problem

In our case study, let's imagine a real estate development company, ABC Developers, looking to invest in a new residential project in the city of Sunshineville. The company wants to identify the most lucrative location and property type that will attract potential buyers and yield the highest return on investment. The problem is to determine the target market, demand-supply dynamics, and pricing trends in Sunshineville.

2. Research Methodology

To conduct the market research, ABC Developers employed a combination of tools and techniques. They started by utilizing real estate analytics tools like Zillow and local MLS listings to gather data on property prices, rental rates, and market trends in Sunshineville. They also conducted surveys and interviews with potential homebuyers to understand their preferences, needs, and buying behavior.

3. Findings and Recommendations

Based on the research, ABC Developers discovered several key findings. Firstly, they identified a growing demand for affordable housing options in Sunshineville due to an influx of young professionals and families. Secondly, they found that the demand was particularly high for townhouses and condominiums with modern amenities and proximity to public transportation. Additionally, ABC Developers observed a limited supply of such properties in the desired locations.

Based on these findings, ABC Developers recommended focusing on developing a townhouse project in a centrally located neighborhood with access to amenities and transportation. They also suggested pricing the units competitively to attract potential buyers and maximize profitability.

4. Outcome and Learnings

Following the research findings and recommendations, ABC Developers successfully acquired a plot of land in a prime location within Sunshineville and commenced the development of a townhouse project. The project received significant interest from potential buyers and was sold out within a short period. The units were priced competitively, and the amenities and location met the preferences of the target market.

The case study highlights the importance of conducting thorough market research before making investment decisions. By utilizing tools like real estate analytics, surveys, and interviews, ABC Developers gained valuable insights into the market dynamics and tailored their project to meet the demands of the target market. The successful outcome demonstrates the significance of data-driven decision-making and understanding the preferences and needs of potential buyers.

By studying this case study, we can learn how to apply the tools and techniques discussed earlier in real-life scenarios. It emphasizes the importance of gathering accurate data, analyzing market trends, and aligning your project with the demands of the target market. In the next section, we will discuss common mistakes in real estate market research and how to avoid them.

Common Mistakes in Real Estate Market Research and How to Avoid Them

In the world of real estate market research, there are some common mistakes that can hinder the accuracy and effectiveness of your research efforts. In this section, we will discuss these common mistakes and provide insights on how to avoid them. By being aware of these pitfalls, you can ensure that your market research is comprehensive, reliable, and insightful.

1. Inadequate Research Design

One common mistake is having an inadequate research design. This could include not clearly defining the research objectives, using biased sampling methods, or neglecting to include a diverse range of data sources. To avoid this mistake, it is crucial to clearly define your research objectives, ensure your sample is representative of the target market, and utilize various data sources to gather comprehensive information.

2. Ignoring Local Market Conditions

Failing to consider local market conditions is another common mistake. Real estate markets can vary significantly from one location to another, and what works in one area may not work in another. It is important to understand the unique characteristics of the local market, including factors such as demographics, economic conditions, and regulatory environment. By ignoring local market conditions, you risk making decisions based on inaccurate assumptions.

3. Reliance on Outdated Data

Using outdated data is a critical mistake that can lead to inaccurate analysis and decision-making. Real estate markets are dynamic, and trends can change rapidly. It is essential to ensure that the data you are using is current and up-to-date. Regularly update your research with the latest market data, trends, and indicators to ensure that your analysis is accurate and relevant.

4. Neglecting to Validate Results

Failing to validate the results of your research is a common oversight. It is important to verify the accuracy of your findings and conclusions through various means. This could include cross-referencing data from multiple sources, conducting follow-up surveys or interviews, or seeking expert opinions. Validating your results adds credibility to your research and enhances the reliability of your findings.

5. Overlooking Qualitative Factors

Market research is not solely about numbers and data; qualitative factors also play a significant role. Ignoring qualitative factors such as customer preferences, lifestyle trends, and community dynamics can lead to incomplete insights. Incorporate qualitative research methods like surveys, interviews, and focus groups to gather insights into the subjective aspects of the market. This holistic approach will provide a more comprehensive understanding of the market and inform your decision-making process.

By avoiding these common mistakes, you can enhance the accuracy and effectiveness of your real estate market research. Ensure your research design is robust, consider local market conditions, use up-to-date data, validate your results, and incorporate qualitative factors. By adopting these practices, you will make more informed decisions, minimize risks, and maximize the success of your real estate endeavors.

Congratulations! You have now reached the end of our comprehensive guide on real estate market research. We have explored the importance of market research, the steps involved, tools and techniques to utilize, a case study of successful research, and common mistakes to avoid. Armed with this knowledge, you are well-equipped to navigate the complex world of real estate market research and make informed decisions. Best of luck in your future real estate endeavors!

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Real estate market analysis: What it is & How to do it

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.

Market research is the preliminary step that every investor must take before jumping into the market. The objective is to be sure that the project is viable and that it fits in the existing market.

Not all real estate investors are patient enough to competently conduct a real estate market analysis. If you want your real estate business to stand out from the competition, you need to do some research. So, what is a market study in real estate?

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What is a real estate market analysis?

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.

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Why do a real estate market analysis?

There are several reasons to do this type of study, the main one is to have information that allows you to invest and buy safely. Other reasons also include:

• To know if you should invest in one city instead of another.
• To identify which elements hinder investment in certain places.
• To know demographic aspects to determine the evolution of the area where you want to invest.
• To have information about investment projects in certain areas and to know if in the future they will have a development that will increase the value of the properties.

By knowing the housing market prices, you will always have the opportunity to negotiate a lower price and avoid overpaying the market value of a property.

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Tips for conducting an effective real estate market survey

Before starting to collect information, it is necessary to clearly define the market in which you are going to position yourself: type of products or services offered, type of market (individuals, companies, administrations, etc.), target geographic segmentation , etc. 

A well-defined market is an essential starting point for conducting a relevant study. 

• Property analysis: To conduct a real estate market analysis is to perform a property analysis. The area and neighborhood, lot size, construction time, services and amenities, etc. should be evaluated.
• Evaluate the original price: Once you have performed the property analysis, search online for the original listing, if possible. This will give you a good idea of the overall condition of the home. Review the photos and descriptions for any updates, remodeling or potential problems.
• Verify property value estimates: Use online resources to give you the estimated market value of the home. Since 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 continue your real estate market research.
• Comparisons: Make a comparison of the property with others in the same area, aspects such as size, price and other elements will help you determine the value.
• Decide the market value: According to all your research, you should have a price range for the value of your property. Take into account everything you have observed and analyzed and how it will affect the value.

To conduct a study you can choose between two solutions: do market research on your own with market research tools , or hire someone. 

Steps to conduct a real estate market analysis

You need to take a structured and organized approach when conducting real estate market research. To do this, you can segment your analysis around these four axes: market, demand, supply and environment, and then you have to ask the right questions. 

The objective is clear: to analyze the market potential and validate the commercial viability of your project.

Step 1: the study of the market and its evolution

As a first step, it is important to be informed about the market in a global way. The objective is to improve knowledge in this field: market volume, trends, likely evolution. 

Here is an example of a list of questions to ask when studying the market and its likely evolution:

• What is the volume of the market? In particular, in terms of turnover, customers, quantity sold?
• How is the market doing now? 
• What are its prospects for the coming years? A market may be growing or stagnating.
• What are the current market trends?
• What products or services are available in the market?
• Who are your direct or indirect competitors? What do they offer? What are the commonalities and differences between what the competition offers and your range of products/services?
• What are your terms and conditions of sale? 
• Who are my potential suppliers and what terms and conditions can they offer me?

These questions will allow you to develop your knowledge of the market situation and the players involved.

We recommend you check this guide to conduct a market survey.

Step 2: Studying the demand

By studying the demand, the objective is to know the customers in the market and to evaluate if there is potential to be exploited. Here is an example of a list of questions to ask when considering demand in a real estate market survey:

• How many customers are there in this market? How is this number changing (increasing, decreasing, stagnant)?
• Who exactly are these real estate customers? Where are they located?
• What is the consumption rate of the customers? How do they behave? 
• What are the consumer’s choice criteria? What is their budget? What are the important points to trigger a purchase? 

Step 3: Studying of the offer

The analysis of the offer consists of studying in detail what your competitors already offer in the market. Here is an example of a list of questions to consider the offer:

• Who are the competitors in the market? 
• Which companies have the largest market shares? 
• What is the size of the main competitors? Where are they located and how do they choose their locations? 
• How long have they been around and what is their financial health? 
• What criteria do some competitors use to succeed better than others?

An in-depth study of your competitors’ offerings can help you identify opportunities to prepare your future offerings and gain competitive advantages. 

Through a real estate market analysis you will have a better understanding of what works, the essential criteria for success, and also what has not worked.

Step 4: the environmental and legal study

The environmental analysis study consists of analyzing the factors that may influence the market, such as applicable regulations, technological developments or any other element that may have an influence.

Here is an example of a list of questions to ask when studying the environment:

• What innovations are affecting the market? 
• What is the regulatory framework governing the market? 
• Are there laws specific to this market? 
• What are the trends in the evolution of legislation?
• Are there professional groups or other actors acting or influencing the market?

Step 5: Data collection process

The data collection process is one of the most important steps in conducting real estate market research, as it allows you to gather information that will help you determine if the project is viable and your investment is secure. 

QuestionPro allows you to easily conduct your field research to get the data you need. It doesn’t matter if you don’t have Internet, our Offline App allows you to conduct surveys through mobile devices and download the information once you have a wifi connection. 

Conduct real estate surveys and start getting the information you need to secure your investment in the real estate market. 

Step 6: Reporting the results

Presenting a report with the information obtained will allow investors to perform an analysis and determine the best strategies to secure the investment. 

Our survey software allows you to visualize the collected data in real time, which helps you to pre-analyze the information and prepare a report where you highlight what is relevant and stakeholders can visualize it and make better decisions. 

Start standing out in the real estate industry by making the right decisions with the help of data! 

If you are thinking of conducting real estate market research, we can help you.

LEARN ABOUT: 5 Ways Market Research

At QuestionPro we have the best tools and a team of professionals that will help you solve all your doubts about our platform, contact us!

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How to do a real estate market analysis like a pro

One of the most difficult things about buying a rental property investment is to avoid getting emotionally involved. In a hot real estate market , it’s easy to make the wrong decision when other home buyers are lined up ready to make an offer.

Successful real estate investors always say that money is made when the property is purchased, not when it’s sold. That’s because it’s much easier to add value to a rental property than to try to turn a profit on a house that was overpriced.

In this article we’ll discuss in detail how to do a real estate market analysis to buy a property that makes good business sense.

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

6 Key Steps to Real Estate Market Analysis

When doing a real estate market analysis, it’s best to use recent sales prices rather than asking prices for homes that are currently on the market. That’s because the listing price is what a seller hopes to get, while the final sales price is what the seller actually received.

The steps real estate investors follow when doing a market analysis are similar to what a professional appraiser does. When done properly, there shouldn’t be a significant difference between what you think a property is worth and the price the appraisal comes in at.

1. 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 use the free rental property analyzer in this article to forecast the potential return of the property. Simply enter some information to view projected key return on investment (ROI) metrics, including cash flow, cash-on-cash return, net operating income, and cap rate.

2. 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.

3. 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).

4. 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
• Age of house
• Kitchen upgrades
• Bathroom upgrades
• Recreation room or bonus areas
• Enclosed patio or sunroom
• 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.  

5. 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.

6. 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.

Common FAQs about a real estate market analysis

Question: Can I find comparables without using the MLS?

Answer: Absolutely. Additional resources for finding recent sales and active listing information include public property records on the county assessor website, Zillow, and Roofstock’s marketplace of active listings.

Question: Should I look at expired listings when doing a real estate market analysis?

Answer: Many real estate investors review expired listings and ‘off market’ listings as a way to gauge what price the market will bear. Usually, homes that leave the market without being sold are overpriced relative to their true market value.

Question: Is a bigger house always a better value?

Answer: Generally, the best houses for real estate investors are the ones that match the median range in the neighborhood. For example, if most of the homes in an area have three bedrooms, smaller homes may be difficult to rent while bigger houses may generate less income per square foot compared to the market norm.

Question: What are the most important factors to consider when selecting comparable properties?

Answer: The 3 main factors to consider for choosing the best comparables are how recently the property sold, where the house is located in relation to the subject property, and unique characteristics of each comparable.

Put your real estate market analysis to work

Doing a good real estate market analysis helps you understand where you are in the real estate market cycle and whether it’s better to buy, sell, or hold.

Investors buying property use a market analysis to identify homes that are profitable and offer the best fit for their investment strategy. Sellers create a real estate market analysis to determine best sales price and marketing strategy.

The fact is that there’s money to be made in any real estate market. Investors use online listing platforms such as Roofstock to determine potential rental property returns and market values for rental property throughout the U.S.

Jeff has over 25 years of experience in all segments of the real estate industry including investing, brokerage, residential, commercial, and property management. While his real estate business runs on autopilot, he writes articles to help other investors grow and manage their real estate portfolios.

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Steps to real estate market analysis

What is real estate market analysis?

Real estate market analysis, also known as comparative market analysis, is the process of evaluating and forecasting real estate markets to make sound investment decisions.

It is a key component of real estate investing , and there are a variety of methods that can be used to conduct a real estate market analysis.

The most important part of any comparative market analysis is data collection, so ensure you have accurate and up-to-date information on all aspects of the real estate market.

It includes site-specific and local factors, as well as current and emerging competition.

In simple words, you will be evaluating the current market value of properties that are similar to the one you are considering purchasing or selling.

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What is included in a real estate market analysis?

1. Market study

• Local economies analysis - Examines the fundamental factors determining the demand for real estate in a specific market .
• Real Estate Market analysis - Examines the demand and supply of a specific property type in the market.
• Marketability analysis - Examines a specific development or property to determine its market competitiveness.

2. Studies based on individual decision

• Feasibility Study Analysis - Assesses whether a particular project is likely to be financially viable and appropriately implemented if pursued under a proposed programme. It's related to develop-ability,  financial feasibility  and investment analysis.
• Real Estate Investment Analysis - Also known as  real estate proforma , which analyses a property to determine if it is a good investment. It includes modelling various timelines and or financing options to determine the best financial outcome under various assumptions.

Your real estate market Analysis should answer three key questions:

• Is there a demand for the type of product you are developing?  
• What rent/price can you charge for your project, and how quickly will the market accept the project? 
• How can the project be planned and marketed to increase its marketability?
• Property Development Feasibility Study 101  
• Real Estate Development Proforma - Ultimate Guide

How to do real estate market analysis like a pro? 

Step 1 - Choose an investment property

Start with location

The first step of your real estate market analysis should be finding a location of a particular property, whether residential, commercial or industrial, which will determine its value.

Location analysis is performed based on improvements, zoning and competition. It also considers the availability of similar properties.

Determining the property's market value

There are many theories and methods available. Some use inaccurate statistical bases; others use local trends or regional trends.

It is impossible to determine the market value of real estate purely based on visual inspections and other non-fundamental indicators. These selections should be made after a thorough comparative analysis of all real estate markets.

The following questions pose challenges for real estate investors performing market analysis:

• What are the factors that determine a fair market value of a property?
• What is the best way to compare properties of similar types?
• How much does an investment property cost? 

Analyse the collective economic, demographic, and local factors that affect real estate values.

Step 2 - Collect decision making data 

The data collection should be viewed as competitive intelligence. For all sorts of data, the analyst must consider bias.

Raw data, also known as primary, is unanalysed and collected by the analyst. This could include reading classified ads, new development announcements, legal notices and census data. Secondary data is data analysed by someone else, who then tells the analyst to conclude.

On the demand side, the analyst should consider the following factors:

• Household size
• Demographic features
• Purchasing power
• Affordability
• Employment statistics
• Commuting patterns

The following items are included in determining the supply side.

• Available space inventories. 
• Vacancy rates and the existing property inventory's character. 
• Recent space absorption, including the sorts of tenants or buyers. 
• Projects that are now being built or are in the pipeline.
• The differences in market rents/sale prices by location and quality. 
• Existing and projected projects' features, functions, and benefits. 
• Concessions and terms. 

The number of information sources available is also not limited. Newspapers, census and private databases, tax rolls, advertisements, and maps, etc. Any source that discloses something of interest—may be used by analysts. 

The real estate market analyst may interview brokers, owners, planners, and local officials. The purpose of the interview is to gather as much information as possible about the market.

Step 3 - Understand local government requirements

The analyst must be familiar with the local government. The government is your largest partner in the real estate business.

If you want to conduct a project, you must first grasp how the political structure supports or inhibits your project. This includes understanding zoning laws, building codes, and other regulations that may impact the real estate market.

Almost everyone in the real estate industry conducts market research:

Analysis from private sources

• Appraisers / Property Valuers
• Real Estate and Financial Brokers 
• Real Estate Developers
• Real Estate Investors  
• Lenders and asset managers. 

Analysis from public sources

• Urban & town planners
• Consultants in economic development
• Governmental organisations. 

Market analysis is utilised in the private sector to increase profitability (and reduce losses by reducing market risks). On the other hand, the public sectors often include a framework of repercussions beyond economics or feasibility, such as density, traffic, or design.

Step 4 - Feasibility analysis and investment analysis  

Feasibility study will help you determine if the investment property is a good fit for your investment goals. The feasibility study should include a detailed analysis of the costs and benefits of the investment.

The feasibility analysis process is designed to see if the numbers add up given current perceptions of how a project should go, how much it will cost, and who will buy or rent the property.

Investment analysis is a related technique that looks at the same financial questions from the investor's perspective. 

Feasibility - often linked with developers and project management—is a component of market analysis for developers, whereas investment analysis explores the same concerns with a different set of options.

A developer may compare various projects, sites, and real estate markets; similarly, an investor may compare potential real estate investments against non real estate alternatives.

Funding factors will, of course, be reviewed by the investor as part of the research; nevertheless, financing is not limited to investors.

Lenders and potential lenders will conduct various investment analyses to assess risk and choose the best type of property development financing . 

Market analysis is essential for a real estate project's first feasibility assessment , but it doesn't end there. Throughout the project's development and management phases, market research plays a significant role in creating the project. 

Market experts are frequently contacted for repositioning measures after a project is up and going and the developer finds that absorption does not meet predictions.

There are as many different types of market analysis as there are different sorts of development initiatives, stages of development, and interests served.

• Property Development Finance: Guide To Property Development Funding  

Market analysis includes:

• Determining the timing for demand.
• Analysing the direct relationship between demand and supply (which should consider the role of competition).
• Calculating investment rates of return

Market study vs Feasibility study

What is market study.

Market study focuses on three main areas of evaluation: the location, the demand for the product, and the supply of comparable items. Answering specific issues posed by lenders, equity partners, or investors should always be the crucial step in any market study. 

Factors affecting the cost of market study

• Complexity of real estate market
• Data availability
• Methodology used
• Number of properties studied
• Size of real estate market
• Time frame of study
• Type of real estate market analysis

The difficulties of location and supply and demand analyses lead to a series of essential questions:

1.  Is there sufficient demand for the existing or projected upgrades to ensure that vacancies are kept to a minimum? This should include demographic analysis, as well as income, employment, and growth projections. 

Price segmentation and coordination with marketability may be additional market components beyond supply and demand analysis. 

2.  Is there a market for such advances, and if so, how easily can the development be sold? What effect would the proposed development have on present supply in the nearby area (local market) and the broader market (regional market)?

3.  How will the development be funded, and where will the money come from? 

Tenants, real estate acquisition/sale, and financing are three types of supply and demand that I recognise. 

A real estate market analysis will also include the following questions, which are more concerned with marketability than with market conditions:

4.  What are the current competitive developments, and how should this project be conceived, planned, and marketed to compete effectively? To put it another way, what is the unique development concept in terms of the site plan, architecture, design, and the target market (tenant, shopper, or user)? 

5.  What essential elements influence your market analysis?

The market study revolves around these five points, which include supply and demand issues. 

A feasibility study concentrates on the financial implications of a proposed development or acquisition. Property Development Feasibility is based on three things:

• A location looking for a use
• Employ in site search
• An investor looking for a way to become involved.

Market analysis and feasibility study Should Include...

While the study paper has no defined format, a typical real estate market analysis will include the following items:

Cover page:  It includes the type of study, property address, and team members.

Letter of transmittal:  Major findings and conclusions.  

Table of contents:  A listing of all sections. 

Nature of the project:  Description of the project, techniques, strategies, approaches used, and the extent of services provided. 

• How to calculate land value in 8 easy steps?  

Economic context:  Defines the market framework; first examines the more significant market areas (i.e., regions or cities) before moving on to the smaller market areas (i.e. neighbourhoods).

Analysts must consider all factors, including sociological, economic, governmental and political.

Property description and proposed development:   It includes a separate description of the site and its improvements. This section outlines the proposed site's physical and economic strategy.

Competitive developments:   While the economic backdrop part will give market statistics on the competitive supply, this section should include facts on the development's most significant competitors.

It should include rental rates and selling prices, vacancy rates, project sizes, and other data. 

Market potential:  In this section, the analyst determines how well the planned development will capture demand in light of the economic backdrop and comparison to competing developments.

This is where you may calculate the development's demand. Where does the demand for the suggested plan come from? What makes your plan unique or similar to the competition? 

The conclusion of the marketability:  This report should not include any new information. This section is devoted to pure analysis. So far in the report, everything has been considered regarding how the projected development would compete.

Addendum:  Any supporting papers, such as site plans, maps, and information that supports other portions of the report, are placed in this section. 

Exhibits:   Include valuable additional items, such as a map identifying the location of the subject, competitive developments, and the market area.

It also includes photographs of the subject property, its block front, the block facing it, and competition schedules in specific sections or as an appendix. 

The differences between the two types of research show a wide variety of needs for thorough real estate market analysis.

A key distinction to keep in mind is that a market study may remain most relevant for a long time. In contrast, a feasibility study is more likely to adapt as financial realities change, such as employment, building and land costs, and other economic data.

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Step 5 - Study the market area

Many real estate investors overlook the significance of market research and site evaluation. The most critical aspect of considering a real estate investment is to study the market area.

An overview of the real estate market area

A thorough real estate market analysis usually leads to market research, but what format does this report take? 

An organised market study prepared logically is beneficial to the reader (whether approval-granting authorities, equity partners, or lenders). This way, the information gives a clear image of the market in all of its meanings, and one can discover meaningful information to make judgments quickly.

Your market area study report should emphasise and explain four critical areas of evaluation:

• The overall market area
• Location-specific factors
• Demand factors
• Supply of comparable properties

These four sections of the market study are meant to prompt crucial questions.

For example, if you can show that the market region, location, demand, and supply factors all favor advancing, it will make sense to others. Equally essential, if you can't build a convincing argument for the idea during the market analysis, why would anyone else want to go ahead with it?

Geographic information systems | Spatial analysis

A study of the market area is the starting point. It is the area where supply and demand are active.

Traditionally, market areas have been assessed by physically inspecting the land. New technology, on the other hand, has broadened the possibility of a market area analysis.

The emerging geographic information systems (GIS) technology, or electronic mapping, empowers real estate decision-makers from relying on arbitrary boundaries.

This new technology allows the analyst to examine geographic data from a genuinely global perspective. In many cases, artificial barriers do hide the actual market region.

A retail shopping mall, for example, would be constructed to service a specified population and geographical market region, allowing fair predictions about traffic volume and potential sales to be made.

However, a thorough examination of the market region may reveal that the outcomes are not always as evident as they appear at first glance.

• How To Sell A Commercial Property In Record Time?

Step 6 - Perform complex market study

You might want to figure out the regional facts that define the potential market. Geographic Information Systems ( GIS ) is the latest tool that you can use for more complex market area research.

These systems can include any database that can indicate a geographic location or spatial dimension for the variables.

GIS would almost certainly discover important insights for similar project studies in any modern market area investigation. Aside from the geographic location of a perceived market, additional market assessments may be required.

Here are some guidelines

• Determine the region not just in terms of geography but also in terms of where the market is located. 

The market area for tenants can include both the immediate neighbourhood and adjacent areas. For example, this could be related to employment placement and access to transit lines in residential real estate projects .

• The study of any project should take into account how the new project may affect existing projects. 

Be mindful of the distinctions between artificial boundaries (county lines, state borders, etc.) and built limits (freeways, etc.) that define or restrict a market region. 

Be aware of the historical patterns of development that are based on cultural or ethnic ties. While these boundaries may change over time and evolve, they remain remarkably constant.

Make cautious assumptions about the optimum scale of development or the size of an existing market region based on unverified assumptions. It is crucial to examine the initial assumptions critically and test the conclusions.

Step 7 - Site evaluation 

The characteristics of one location differ significantly from those of another, and the explanations are not always clear. 

The characteristics of a region have an impact on the conclusions. An interstate highway, a major border crossing, or employment patterns in one city or region, will have a substantial impact on your market analysis.

This leads to the significant real estate market analysis step, which is a more detailed site assessment.

What's includes in the site evaluation?

Physical variables such as terrain, land shape, adjacent usage, and proximity to essential services should all be compared from site to site in a site evaluation . 

Comparative analysis allows you to evaluate a specific property or a set of potential sites while keeping certain attributes in mind.

A shopping mall near a freeway exit would, of course, have more potential than one located outside of the city limits and away from the visibility of potential shoppers, the ease of access via roads and transit stations and the overall practicality of placing a shopping mall on well-travelled routes.

When comparing residential properties , local transit and proximity to amenities such as schools and retail are essential factors to consider. The analyst must walk the site, even if it may seem obvious to some.

Step 8 - Zoning

The issue of zoning should not be disregarded while doing a site examination. We can't just assume that a rezone will automatically be granted because the land has been purchased for a specific purpose. 

Lower-priced property may be so priced because of its current zoning, and local governments (not to mention individuals living nearby) are unlikely to support a rezone solely for the convenience of development interests (and profit). 

On the other hand, if the new project will benefit the community and local government through more significant tax revenues , rezoning approval may be pretty easy to get. 

One risk aspect in the site appraisal is the possible complications of investing in the land when zoning issues develop. You may need to compare undervalued but possibly lucrative land to more prominent locations.

Although the cost of already-zoned commercial land is likely to be higher, the likelihood of public anti-growth campaigns or refusal of rezoning applications by local governments is greatly reduced when zoning concerns are not discussed. 

It's critical to review state and municipal regulations beyond zoning for site appraisal. The zoning is worthless if you won't get approval for your project due to GMA regulations because the site is outside the UGA. 

As a prerequisite for approval, growth management regulations may require you to demonstrate the need for the development you propose.

For instance, you may need to assess a site in the context of a county's inventory of land with similar zoning. How much of that land has been developed and is in use? 

In GMA states, you may need to limit your site evaluation to available property within the existing urban perimeter or be prepared to show the need for your development outside that border.

Step 9 - Analyze demand

Economic demand  

Consumers need and want more of a commodity or type of outlet (shopping centres, apartments, houses, etc.) or when that demand is likely to follow if and when the development occurs.

For example, a hamlet may be 60 miles from the nearest large-scale regional mall. The lack of such a mall in town does not indicate a lack of demand. If such a facility was to be created, it is logical to assume that shoppers would arrive immediately rather than going 60 miles. 

As a result, a demand analysis must contain understanding and analysis of real estate market forces and trends, but this is not always the case. You might also see a more politicised notion of demand.

In some instances, the actual objective is to prevent change in any form; in that case, zoning and municipal code requirements may not be adequate to have your proposal approved. 

You may need to include the local political demand for development in your demand analysis.

Political demand

Political demand in some jurisdictions is nil. From a development standpoint, the project may not be feasible due to politics, regardless of the economic demand.

This issue is widespread, but the breadth of issues linked with anti-growth sentiment in residential development (particularly against low-income housing) is severe.

Slow growth policies may ultimately demonstrate that when the government attempts to limit growth, it creates poorly planned growth and cannot prevent it.

Step 10 - Analyze supply

The concept of supply is complicated in areas where legislation has been drafted to regulate or prevent growth.

Supply is clearly known in economic terms. It refers to the features that are available for a given purpose. Prices will soften when economic supply is high, and demand is low.

When there is a shortage of supply and high demand, prices rise. This fundamental economic notion is not difficult to grasp, at least in its theoretical definition.

• 7 Reasons why property values increase  

Real estate supply

Real estate supply is divided into three categories: completed, under construction, and projected. The real estate market analyst should discount the variables because each has a distinct level of reliability.

Developers , for example, may propose a project for which they have no tenants to frighten off other developers or lure a possible tenant into driving the development.

Most downtown office buildings cannot be completed or financed without a committed tenant. As a result, it's usual for developers to proclaim construction as a marketing technique rather than a statement of fact.

In a written market study, an economic analysis may limit the supply and demand issues. Those economic evaluations are perfectly appropriate if one conducts the market analysis to persuade lenders of a project's profitability and cash flow strength .

The same holds when a study is aimed to attract equity partners or get clearance for tax credits in low-income housing.

However, if a real estate market analysis aims to assess whether a project is economically and politically viable, you must look beyond the economic version of supply.

Importance of existing supply for residential development

Anti-growth conflict is frequently linked to supply issues in residential developments . Anti-growth forces may claim that there is a sufficient supply of housing and that new construction is unnecessary.

Even when economic demand is apparent, you may face this argument. 

On the other hand, the anti-growth argument persists: more people will migrate if you build more houses.

This entails increased traffic, more crime, the need for better roads, larger schools, and other growth-related disadvantages. As a result, supply may become a necessity rather than a simple economic analysis of whether enough purchasers are available.

Importance of existing supply for commercial real estate

The issue of supply is equally complicated in commercial developments. A real estate market study would examine purchasing habits, traffic patterns, logistics, and site-specific questions to persuade the research's reader that, for example, a mall will succeed at a specific location.

This analysis would include commercial vacancies that might be influenced by changing traffic and shopping habits, local and regional rivalry, and average rental rates in the area.

Step 11 - Check net absorption 

Determining the demand for residential or commercial developments requires a study of the trend in net absorption. In the case of single-family houses , there has been a need for real estate sales patterns in recent months. 

The square footage/meterage of available space modified by vacancy levels is known as net absorption.  

Net Absorption = Space Occupied - Space Evacuated + Space Demolished - New Space Construction

Step 12 - Identify risks

Identifying risk is an element of the feasibility study process in real estate market analysis —and is critical for the lender or investor.

This risk can manifest itself in various ways, not only in the most obvious ones like a net loss or negative cash flow .

In some instances, a considerably more concerning risk is that the initial funding will not be sufficient to complete the project. The feasibility study shows a hypothetical depiction of what will happen during the project's acquisition , development, completion, tenancy, and eventual sale.

What if the initial funding or equity investment isn't sufficient to accomplish these steps? Where will the extra funds come from? Of course, the study's attempt to depict how existing facts might appear in the future—in other words, a forecast—should be considered one of many possible results.

Methods of risk analysis

There are a variety of methods that can be used to identify risks in real estate. Some common methods include:

Fundamental analysis: This method looks at the underlying economic factors that impact real estate markets, such as population growth, job growth, and interest rates.

Technical analysis: This method looks at historical data to identify trends in the real estate market .

Property specific analysis: This method looks at specific characteristics of an investment property, such as its location, age, and condition.

Market analysis: This method looks at the overall real estate market to identify risks and opportunities.

Step 13 - Feasibility study

While the subject of feasibility is primarily a financial one, it is much more than that. The usual accounting revenue estimate, cost and spending plan, and cash flow projection are confined to documenting potential outcomes. 

The feasibility study, on the other hand, is significantly more. Although it is mainly financial, it should be fascinating in ways that go beyond the numbers. 

A lender examining a feasibility study should determine whether or not the risk of financing the project is acceptable.

Feasibility does not show an attempt of no risk; a potential lender or equity partner would not accept this premise, and such a claim would be unsupported by any standards.

On the other hand, the risk issue will be on the minds of everybody approached by developers for funding or investment. 

In its most basic form, feasibility is a combination of a budget and a disclosure statement. It should be viewed as part of a test of financial potential, risk, and required finance.

A part of due diligence , all of this is used to examine the project's fundamental assumptions. In light of this risk, the feasibility study must cover the financial risk in great detail.

The feasibility study serves as a risk disclosure summary during the due diligence process as a planning document.

It should be based on market research. The disclosure must be based on market assumptions; thus, a feasibility study cannot begin before a market test.

In broad strokes, real estate market analysis answers this one question:

Does it make sense to play in this market, given the site issues, supply and demand, and competition?

In comparison, the feasibility study should address the following question: 

Can you afford to build the project as initially planned, or do you need to assess expenses in light of market and financial factors?

Market research indicates the best way to complete the project in scope and size (and thus, cost). As a result, the market analysis informs the feasibility study's assumptions.

That is the entire assumption base for analyzing risks and assessing whether a lender can reasonably expect regular payments or an investor can reasonably expect a return and, eventually, a profit.

Real estate market analysis - Use cases

Should market research be conducted to secure financing only? The market and feasibility studies are necessary for acquiring funds for a project, but is that the end of the procedure?

In reality, real estate market analysis and the information gleaned from it are helpful planning tools. The architect, engineer, and project planning team can and should use these throughout the project.

The individual or firm preparing research examines population, income, employment trends, commute and traffic patterns, and other factors when generating the raw material.

You can use this document to give vision and direction to all those involved in making the project a reality.

Much focus is placed on a project's marketability, either in terms of rental cash flow or how to optimise market value if the developed property is to be sold. However, a marketability study is only a small element of real estate market analysis as a whole.

The latter is beneficial when it incorporates components of the market study and feasibility study. However, it is even more powerful when the material and conclusions are presented to convey the crucial project vision.

Community involvement, municipal planning, innovative design, sensitivity to local issues, and the project's practicality in every aspect, not only in terms of financial success, are all part of that vision. Because no two projects are alike, market analysis is crucial to a project's local acceptance.

Any attempt to construct initiatives using a cookie-cutter approach would almost certainly be met with resistance. Style, site layout, and price range should all be determined by a list of local characteristics.

Citizen participation and opposition to the development, local political atmosphere, and the far more concrete site-specific qualities, such as topography, closeness to traffic patterns, and adjacent zoning, are just a few examples.

The most influential real estate market analyses meet the needs and answer the questions of each of the interested parties. This includes lenders or equity partners, developers or contractors, architects and designers, marketing interests or users, and local real estate agents.

Control profit on any property with this free Property Development   Feasibility Study Bundle .

What is a market analysis of a house?

A home market study assesses similar properties that have previously sold in the neighbourhood, known as comparables or comps, to provide an estimate for a list price for a seller or the validity of a bidding price for a purchaser.

Why is a Real Estate Market Analysis Important?

Any investment should include a real estate market study. It helps investors identify the correct residential properties by determining the estimated worth of the property in issue. In general, it benefits property investors in avoiding unwise decisions.

How do you analyse the rental market?

You can analyse the rental market by looking at vacancy rates and rent growth.

Vacancy rates indicate how much of the rental stock is unoccupied. A high vacancy rate means that there is a lot of available rental stock, which could lead to downward pressure on rents. Conversely, a low vacancy rate means that there is less available rental stock, which could lead to upward pressure on rents.

Rent growth indicates how much rent has increased (or decreased) from one year to the next. A high rent growth rate means that rents are increasing rapidly, while a low rent growth rate means that rents are increasing slowly or not at all.

Related Posts

How to hire the right construction contractor for your project, how to sell a commercial property in record time, the power of financial leverage and growth investment, 8 keys to property ownership, everything you need to know about a real estate guarantee, forecasting methods in property investment: how to predict the future.

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The Complete Guide To Commercial Real Estate Market Analysis

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When I was researching topics to write about earlier this year, “real estate market analysis” came up repeatedly.

I went down the rabbit hole of repeatedly searching for this topic and quickly concluded that peoples’ ideas of “market analysis” are wildly different.

In real life, you could debate the exact meaning, especially if you consider companies and assets across all industries.

But if we limit the industry to commercial real estate and the purpose to financial modeling and valuation , then it’s easier to explain:

The Purpose(s) of Commercial Real Estate Market Analysis

The purpose of commercial real estate market analysis is to generate reasonable assumptions for use in financial models and to ensure that the qualitative aspects of the market and property meet your requirements.

For example, if you are building a real estate pro-forma for a multifamily property acquisition, you’ll have to make assumptions for items such as:

• Average Rents per Unit or Square Foot
• Annual Growth in Rents
• Occupancy Rate
• Expenses and Net Operating Income (NOI) Margins
• Required Capital Expenditures
• The Going-In Cap Rate and Exit Cap Rate

You use market analysis to determine these numbers or to decide if someone else’s numbers are reasonable.

If rents for similar properties in the same area have been growing at 3% per year, on average, then it will be difficult to justify a 10% growth rate in your model.

But a 4-5% growth rate might be easier to justify, especially if something specific explains the difference – such as a renovation, population gains in the area despite a limited housing supply, or a company like Amazon moving in.

Nearly all real estate markets are cyclical , so you pay the most attention to the values of these items in the low points and high points of previous cycles.

This is especially true if you’re doing a credit analysis of a property deal – with limited upside, lenders focus on the numbers in the pessimistic scenarios and the chances of losing money if they transpire.

A few years ago, I helped a client win a job at a real estate credit fund , and then I interviewed him about the experience. Here’s a direct quote from him about market analysis:

“When we see the marketing documents for a new deal, we gloss over most of the ‘Market’ section except for the peak-to-trough rent , which we immediately plug into our models.”

How to Conduct Real Estate Market Analysis

In real life, you’ll do a combination of online research and offline work to analyze the market.

Major components of this analysis might include:

• Comparable Property Sales – What have similar properties in the area sold for on a per-unit and per-square-foot basis in the past few years? What about the Cap Rates?
• Comparable Properties – What are the average rents at similar nearby properties? What about the occupancy rates and concessions given to tenants?
• Historical Rent, Expense, and Other Trends – How have rents changed over the past 5-10 years? What about expenses, such as property taxes and maintenance? How have Cap Rates changed over the past few cycles?
• Lease Terms and Renewal Probabilities – What’s the average term of a lease? How many free months of rent do tenants receive? On average, what percentage of tenants renew their leases upon expiration?
• Absorption Data – What is the total amount of space that becomes occupied in a given period, minus the amount that becomes vacant? How many new units, properties, or square feet are constructed each year, and how many are leased out?
• Demographic Trends – Is the population in the area rising or falling? What’s the average family income, and what is the unemployment rate? Is the population relatively young, or is it aging rapidly?
• In-Person Assessment of Property and Neighborhood – There are some things you can only figure out in-person.

Many online sources recommend using sites like Zillow to look up recent sales and new listings, and trying to find properties with “similar numbers of bedrooms and bathrooms.”

That might work for single-family homes (i.e., places that families purchase, live in, and do not rent out to others), but the process differs quite a bit for commercial real estate .

For example, you might pull information from paid databases like Real Capital Analytics, CoStar, or LoopNet, and you might look at market reports issued by the big commercial real estate brokerage firms , such as JLL and CBRE.

The paid databases help, but the free reports from brokerage firms contain a surprising amount of information.

To see for yourself, try Googling “CBRE market update multifamily [Major City Name]” and you’ll find PDFs with graphs, summaries, and a lot of data.

To drill into this information from online sources, tools like Excel power query might be useful as well.

In-Person Assessments: Say, What?

With real estate market analysis, online research can only take you so far.

If your firm is serious about a deal, and it’s a significant transaction for them, you’ll almost certainly go for an in-person visit at some point.

In-person visits give you information that you’d never be able to find online.

For example, if the area has an epidemic of homeless people and trash on the street, you’ll quickly realize that by using your own eyes.

And if the area is diverse or not diverse in terms of ethnicity, income, and profession, you’ll learn that from an in-person visit.

You’ll also learn a lot about the property itself – everything from the “vibe” to the direction the windows face to the quality of the furnishings.

In-person visits can quickly reveal whether or not the sponsor is spinning a too-good-to-be-true story as well.

For example, many real estate investment groups plan to buy a property, improve it, and then raise rents from, say, $800 per unit to $1,000 per unit, arguing that $800 is well below market rates for the area.

If you look at online reports from the brokerage firms, you might initially agree with them: it seems like $1,000 is closer to the average rate.

But then you go in-person, and you quickly realize that average rents are lower in this one specific 10-block radius of the city because it has a crime problem .

Gang members live there, and local police tell you that this one part of town keeps them busy most of the time.

You wouldn’t necessarily reject the deal based on this finding, but you would become far more skeptical of the sponsor’s plan.

Commercial Real Estate Market Analysis In Practice

Here’s an example of how you can find market information and use it to check your assumptions in a financial model for a real estate deal, taken from the office development case study in our Real Estate Financial Modeling Course .

This deal corresponds to 100 Bishopsgate , a 36-story office development in London.

Many assumptions go into this model, including the land price per square meter, the construction costs, the number of tenants and their lease types, the annual change in office rents in London, the annual rental escalations, and the expense growth rate.

Then there are also “concessions” for the tenants, such as a certain number of free months of rent, and tenant improvements, which give the tenants money to customize their space.

I found all the reports required for this real estate market analysis with simple Google searches for terms like “London office market rent trends” and “London office prime yield.”

You can get two of the reports, with the key sections highlighted, below:

• JLL – London Market Rents and Prime Yield Data
• Carter Jonas – London Market Data

Comparable Property Sales, Comparable Properties, and Rent, Expense, and Other Trends

We used the JLL report here to check/confirm potential trends for the change in rent and Cap Rates, called “Yields” here:

( Click to view larger version )

With the “Prime Rents” graph, it’s important to focus on the percentage change and, specifically, how much rents fell in the last recession.

The nominal rent figures have increased since then, so rents would not necessarily decline to £45 or £40 per square foot if another recession struck.

However, they could fall by the same percentage as they did in the last downturn (~25%).

That makes our assumed decline rates of 7%, 3%, and 1% in the Downside Case here a bit too optimistic.

Therefore, we might want to reconsider the Downside Case numbers for both Prime Yields and the Change in Prime Rents if we believe another 2009-style recession is plausible.

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Moving on, we found information on current rents in the City of London from another source (the Carter Jonas report):

And then we found information on current expenses and rent-free periods in the same report:

There wasn’t much information on expense trends, but looking at past reports, expenses tended to move in the same direction as rents, but by lower percentages.

So, if rents increase by 6%, we might assume only a 3-4% expense increase.

We did not create explicit sections for Comparable Properties or Comparable Property Sales here because we relied on the market-wide data instead.

Also, since this is a new development , lists of individual properties are arguably less relevant than data for the entire region.

Lease Terms and Renewal Probabilities

Renewal probabilities are a big part of any office, industrial, or retail model because these properties tend to have fewer tenants with more customized leases.

It also takes significant time to find a new tenant if an existing one vacates, so lease expiration is a huge risk factor that you try to assess in any real estate market analysis.

Fortunately, other sources (MSCI) track the percentage of tenants that renew or vacate across these three property types in the U.K. – even going back ~20 years:

We’re assuming renewal probabilities of 40%, 50%, and 60% in the Downside, Base, and Upside cases here, which are probably too optimistic based on this data.

On the other hand, this data is for the U.K. as a whole, not just London – and, presumably, it’s easier to find tenants in the City of London than it is in Random-City-in-the-Middle-of-Nowhere.

This same document has information on the average lease terms and rent-free periods, but they confirm the numbers in the Carter Jonas report, so I’m not pasting them in again.

Absorption Data

A lower absorption rate means more “downtime” spent searching for new tenants, a lower renewal probability, and lower rents.

So, in theory, we should be able to reflect all of those in the assumptions for this model.

But we did not do that here because we could only find partial information on absorption in the JLL report.

They list the “take-up,” or the square feet of space leased out each year in different parts of London, but they don’t have information on the space that becomes vacant each year.

Also, it might be double-counting if we tried to increase or reduce the renewal probabilities and rents based on the absorption data when we’ve already made assumptions based on possible market cycles.

Demographic Trends

We did not look up or use demographic trends at all because this property development is in a prime area of a large financial center.

Information on the population, average income, and the unemployment rate would be more useful in a smaller city or town that’s dependent on a few key employers.

For example, Amazon, Microsoft, and Boeing account for a huge percentage of total employment in the Seattle region in the northwestern U.S.

At one point, Amazon alone occupied ~20% of all prime office space in the city .

If we were looking at a property there, we would pay more attention to these demographic trends and even points like company announcements and news.

In-Person and Qualitative Assessments

Finally, we did not complete any in-person visits or assessments here because this is a case study, and it’s very difficult to “show” that type of assessment in an online course.

For development deals, in-person visits may be a bit less useful unless you’re familiar with the construction process and what to look for.

For example, does construction activity seem lower or higher than expected, given the project’s time frame? Is one part of the building lagging? What are the workers saying?

You might try to answer those types of questions with an in-person visit, but you’d need to bring along someone who has experience with the construction process.

The Truth About Real Estate Market Analysis

In this case, the conclusions are simple: we’re probably too optimistic with most of our assumptions, ranging from rent and expenses to renewal probabilities to likely changes in average rents.

But that’s also because we’re looking at this from an equity perspective (think: real estate private equity ), which means that we need some amount of optimism to “sell” the deal and get others to buy into it.

A lender analyzing this deal would use much lower numbers and find ways to justify below-market rates for many of these assumptions.

Market analysis is also one area where the on-the-job requirements differ significantly from the requirements in case studies and modeling tests.

In tests and case studies, you don’t need to do much more than what we did here: review the provided data and make sure your numbers aren’t too far off.

But in real life, you might go far beyond this with on-the-ground research, interviews, and more.

Different firms and groups have different standards for this process, so maybe it’s not so surprising that articles about “real estate market analysis” present wildly different views.

Further Reading

If you liked this article, you might be interested in How to Get into Commercial Real Estate: Side Doors, Front Doors, Steppingstones, and Career Paths .

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street . In his spare time, he enjoys lifting weights, running, traveling, obsessively watching TV shows, and defeating Sauron.

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2 thoughts on “ The Complete Guide To Commercial Real Estate Market Analysis ”

I’m an “old” reader of your blog (2010 or so) and I’m interviewing for a position in a RE fund (while I was an analyst in IB I never had to work on a RE model, only did pitch books). Thank you! :)

Thanks! Glad to hear it. Check out our other RE articles this year for more examples.

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What Is a Real Estate Market Analysis & How to Perform One

Paul Moore is the managing partner of Wellings Capital , a private equity real estate firm.

After college, Paul entered the management development track at Ford Motor Company in Detroit. After five years, he departed to start a staffing company with a partner. They scaled and sold the company to a publicly traded firm five years later.

After reaching financial independence at the age of 33 and a brief “retirement,” Paul began investing in real estate in 2000 to protect and grow his own wealth. He completed over 85 real estate investments and exits, appeared on HGTV’s House Hunters, rehabbed and managed dozens of rental properties, built a number of new homes, developed a subdivision, and started two successful online real estate marketing firms.

Three successful commercial developments, including assisting with the development of a Hyatt hotel and a very successful multifamily project in 2010, convinced him of the power of commercial real estate.

Paul was a finalist for Ernst & Young’s Michigan Entrepreneur of the Year two years straight (1996 & 1997). Paul is the author of The Perfect Investment – Create Enduring Wealth from the Historic Shift to Multifamily Housing (2016) and has a forthcoming book on self-storage investing. Paul also co-hosts a wealth-building podcast called How to Lose Money and he’s been a featured guest on 150+ podcasts , including episode #285 of the BiggerPockets Podcast.

Paul earned a B.S. in Petroleum Engineering from Marietta College (Magna Cum Laude 1986) and an M.B.A. from The Ohio State University (Magna Cum Laude 1988). Paul is a licensed real estate broker in the state of Virginia.

WellingsCapital.com Email [email protected] LinkedIn Twitter @PaulMooreInvest How to Lose Money podcast

In this guide

Whether you plan to flip a home or buy and hold a property, an accurate real estate market analysis is key to your success. This goes beyond comparing similar properties—although that’s an important step! You need to develop a comprehensive understanding of the local real estate market to ensure your “diamonds in the rough” stand up to scrutiny.

During a market analysis, you’ll assess details like the economic, employment, educational, and even ecological health of the area. You should examine local social, technology, and political issues, and determine whether those factors match your personal and financial goals and preferences.

If all that sounds overwhelming, don’t fear. This guide explains exactly how to perform a market analysis, which will help you decide if an individual property matches your investment targets. In the process, you’ll develop a scorecard to compare strengths and weaknesses and opportunities and risks of different real estate markets. Whether you’re investing in Tampa or Seattle—or trying to decide between two different areas—a proper market assessment is essential.

Real estate market analysis vs. comparative market analysis

A comparative market analysis (CMA) uses similar, recently sold properties to price a home. But sale price, square footage, lot size, number of bedrooms and bathrooms, and proximity to amenities are all just parts of the picture.

Is there an over- or under-supply of homes compared to demand? What are the demographics of buyers who will be interested in a particular neighborhood? Do existing roads and businesses adequately support current residents? Is the area prone to flooding or near areas with a high wildfire risk?

Keep in mind that a CMA and real estate market analysis are both subjective, but a broader market analysis is based on a larger number of factors and data points. Also, they are both different from a property’s appraised value, which is done by a certified appraisal professional.

Start analyzing today

A good investment begins with a solid plan built upon solid math. Quickly and efficiently analyze a potential real estate investment using BiggerPockets’ investment calculators . We’re here to help you maximize your profit while lowering your risk—no matter your strategy.

Where to find real estate market information

In general, market analysis resources should be objective and unbiased. Of course, consulting with seasoned professionals is important—and they will have their own subjective views. But you need to balance their input with hard data. Your research should include:

• Local newspapers
• The National Association of Realtors and local real estate organizations and agents
• U.S. Census Bureau and U.S. Department of Labor
• The Federal Housing Finance Agency (FHFA)
• The FHFA House Price Index
• Local county registers of deeds and tax assessors offices
• Online listing services like Zillow , Trulia , and Redfin
• Services like NeighborhoodScout

Essential real estate numbers and terms

Don’t dive into your market analysis without knowing the essentials first. Understand these concepts before diving into your assessment.

Days on market

How long is the average property on the market before it sells? This number is called “days on market” (DOM), and it can be used in two different ways:

• To assess the status of an individual property
• To determine the average DOM—which provides perspective on an area’s overall market

Rental prices

The amount of rent you charge should be based on the market value of your property and rental costs for comparable homes.

A good guideline is to charge monthly rent that’s between 0.8% and 1.1% of the property value. If the home is worth $100,000 or less, you can price rent at the higher end of the range. Depending on the local market, rent for homes valued at more than $350,000 should be adjusted to a lower percentage to help attract tenants. However, this might not be as important in very expensive markets like San Francisco or Miami.

When determining rent, be sure to:

• Include your costs for expenses like repairs and maintenance, taxes, insurance, and other fees as you calculate cash flow and profit margins
• Account for washers and dryers, recreation areas, or other add-on amenities that justify higher rent
• Take local economic conditions and seasonality into account, since they affect demand and tenants’ spending power

Fully research local laws that regulate rent. Communities in California, Maryland, New Jersey, New York, and Washington, D.C., have rent control laws that strictly govern how much rent can be raised each year.

BPInsights’ Rent Estimator can help you understand your local market, too.

Cash-on-cash return

Cash-on-cash return lets you compare annual cash income (projected or actual) against the cash you’ve invested. It’s different from standard return on investment (ROI) because it only looks at cash, not the total return.

To calculate cash-on-cash return, divide annual pre-tax cash flow by cash invested. So, if you paid $100,000 with a $90,000 mortgage and sell after 1 year for $110,000:

First-year cash expenses

• Down payment: $10,000
• Closing costs, insurance, and maintenance: $1,000
• Loan payments: $2,500, including $500 to principal

Total expenses: $13,500

First year cash inflow

• Sale price minus mortgage payment: $20,500

Total inflow: $20,500

Cash flow: $7,000 ($20,500 – $13,500) Cash-on-cash return: 51.9% ($7,000 / $13,500)

Price-to-rent ratio

The price-to-rent ratio compares the median home price and median rent to evaluate the potential profitability of an investment.

To determine the ratio for an individual home, divide the purchase price by the total annual rent for an individual home. (For a larger market, divide the median annual price by the median annual rent.) The rule of thumb is to consider buying when the ratio is less than 15.

Gross rental yield

For an individual property, divide the annual rent by the total property cost, including purchase price, closing, and renovation costs. Then multiply by 100 to create a percentage. The results can be used to compare comparable homes.

Capitalization rate (cap rate)

This is like gross rental yield, but cap rate uses net income to determine your rate of return.

Divide your expected annual net operating income, including management fees, upkeep, and property taxes, by the property asset value to get a percentage value.

There isn’t a “recommended” cap rate , but the percentage can be used to compare properties. Typically, the expected cap rate depends on the market—hence why a proper market analysis is so important. One other thing to consider: A lower cap rate often corresponds to better valuation, higher potential return, and lower risk.

The results can also help determine the time to recover your investment.

Property taxes

Common wisdom views high property taxes as a bad thing. But don’t cross off any locations with high taxes during your market analysis! High-quality, in-demand neighborhoods that attract long-term tenants often have high taxes. You must balance the risks and rewards.

If a property listing doesn’t include estimated or recent property tax figures, ask your agent. The local tax assessment office will also have all tax data on file. Do research into whether future increases are likely and to assess recent trends. This will help you ensure that competitive rental prices can accommodate anticipated tax loads and your personal cash flow.

Essential market numbers

Buyer’s markets vs. seller’s markets aren’t specific numbers, but they’re indicted by statistics like DOM, price increases or decreases, and overall inventory of homes for sale. Your market analysis must include a determination of what kind of market you’re working with.

• A buyer’s market has more supply and less demand—think of the 2008 recession. Home prices dropped, construction nearly stopped, and foreclosures increased. This gave buyers tremendous leverage in negotiations.
• A seller’s market is created when there’s more demand than supply. This happened just before the crash in 2008, when home prices rose dramatically.

Areas with struggling economies are frequently buyer’s markets. Cities with growing industries and lots of jobs tend to be seller’s markets, leading to bidding wars and multiple offers on individual properties.

You can find local home inventory data via Zillow , Movoto , the U.S. Federal Reserve , the National Association of Realtors (NAR), and local real estate organizations.

NAR provides a wide range of important information, both on a national and local level. Their resources include:

• Existing home sales : National statistics on total sales, median price, year-over-year changes, inventory, market conditions (such as the percentage of first-time buyers and sales to investors), and sales by region and price range, among others. Need information on the state, city, and county level? Contact state and local Realtor associations.
• Pending home sales index : Housing contract activity, including details on monthly indexes and quarterly forecasts. If you’re not an NAR member, historical information is available for purchase.
• Metropolitan median area prices and affordability : Median home prices, percentage changes, and information on construction and employment activity for more than 140 metropolitan areas.
• County median home prices and monthly mortgage payment : Data for individual counties.
• Housing shortage tracker : Data based on how many new building permits have been issued in 178 metro areas. Includes alerts for areas that need more inventory to address increased demand.
• State housing statistics : An interactive map that provides different details for each state.

Breaking down the real estate numbers

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How to Analyze Real Estate Markets

Understand what amenities sell.

Before diving into a market, it’s important to know what sells. This applies to both resales and rentals, but the specifics might be different. Certain basics—hardwood floors, washer/dryer, modern kitchen, a balcony, covered or garage parking, heat and air conditioning—generally make properties much more appealing. Most renters will want these amenities .

For the most part, these elements won’t vary between markets. But there will be differences, and it’s important to know what those regional differences are. In Arizona, for example, buyers and renters may expect a backyard pool.

Match amenities to your real estate plans. Who do you want to rent to? Carpet might be more desirable to a family with small children. Older buyers might prefer a single-story house. Upgrades, like tile backsplashes, might be too expensive for a particular home, for the neighborhood, or your desired price point.

Make sure you strike the right balance between what’s right for the home, for your target tenants or buyers, and for your investment objectives.

Interpreting sales activity on comparable properties

The rule of thumb is, the fresher a listing seems, the better. Older listings imply that they haven’t sold because something is wrong with them.

You can use the following types of information to assess trends in a specific real estate market—and to compare specific properties you might be interested in. Or, read BPInsights’ in-depth articles for deep dives into local market trends.

New and existing home sales reports

• Your real estate agent for recent local activity on comparable homes
• U.S. Census Bureau for data on new residential construction
• National Association of Homebuilders for annual, quarterly, and monthly data on new and existing home sales

This information can reveal early indicators of developing economic shifts, changes in consumer behavior, regional trends, and future housing demand.

Current sales

There are two categories to investigate during your market analysis:

• Pending sales provide the most current values for comparable homes.
• Closed sales give historical perspective on how prices have trended over time.

You can check recent sales by neighborhood on Zillow , Realtor.com , Redfin , Trulia , and RealtyTrac , among others. Use this information to develop the average sale price in the area you’re interested in.

As mentioned earlier, DOM can be a powerful indicator for both an individual property and for regional trends.

To illustrate the power of DOM, Zillow found that a home that sells within five days has a 57% chance of selling for list price. In subsequent weeks, that chance falls to 50%, then 39%, and so on. A property may be on the market for longer than average because it’s overpriced or needs repairs or upgrades.

The average DOM—based on all the homes listed and/or sold in a given area—indicates the status of various factors in the overall market. These include oversupply, negative economic indicators, or a major business or industry downturn.

Keep in mind that these numbers are relative. If a region has high DOM, check for patterns over the past year or two to find out if the time to sell has always been higher than other areas.

DOM is typically available via the multiple listing service (MLS). It can also be found on commercial listing sites like Zillow and Redfin —or ask your agent.

Price reductions

Lowering a home’s asking price clearly indicates something was miscalculated at the beginning of the sales process.

Try to determine the specific reasons why any property is faced with high DOM or price reductions. In addition to structural or design issues, the home may have appraised significantly below its original asking price.

If price reductions have occurred with multiple properties in the market you’re assessing, it’s important to understand the reasons so they can be part of your negotiating strategy. Perhaps more importantly, that understanding can also provide critical insight into whether the area is a viable investment opportunity.

Seller credits

Closing costs paid in part or in full by the seller—also called seller credits —are usually part of negotiations for an individual sale. They can reduce the cash required from buyers and the sale price for sellers if the deal includes an arrangement to finance the seller credits into the mortgage package.

But take a broader view. Are seller credits common in the local area? This will be shown in details for closed listings and could enhance your investment position by reducing your cash outlay.

Understanding the broader market

Before investing in a market, you need to understand its history and any potential changes.

Local Realtors, agents, and investors

During your market analysis, develop contacts with and strategies around these important local players.

• Which agents have the most listings? You’re looking for a balance between who will be the most knowledgeable and who will devote the most personal attention to your goals.
• Do you have any personal referrals? This includes agents you’ve worked with in the past.
• Who are the community leaders? Find real estate professionals active with civic groups, education organizations, charities, and local business. They have more expertise on factors that can impact your investments.
• What are the local business publications? Stay up-to-date.
• What associations impact housing policy? Network with builders’ associations, business organizations, and local developers.
• Are there any local zoning issues? Be aware of upcoming changes and anticipate how they are likely to impact property values.

Historic data

Any thorough market analysis involves an investigation into historic data. Public records can show neighborhood trends and price increases and decreases. It also highlights events like ongoing easements that allow growing commercial encroachment into a residential area.

Property information

Search the county tax assessor’s office, county recorder, or city hall to find a home’s transaction history. Public records can reveal past mortgages, easements, foreclosures, tax liens, or if a current listing is a short sale.

You can also check with a real estate agent or CRS Data for information. Online real estate sites often have similar data, but they may not be completely accurate or up to date.

Demographics

What are the ages, income levels, professions, and other characteristics of the buyers or tenants you want to attract? Who are the most prevalent buyers in a specific area—are they families or single twenty-somethings who work in tech? With this information, you can tailor your investment and marketing decisions.

For example, older, more affluent buyers may want to downsize to smaller but still well-appointed homes. Younger tenants are likely to be drawn to smaller, more affordable housing closer to a city center and entertainment.

You can find helpful information at Census Reporter . The site provides a range of city and county data, like population, median age, sex, income, types of transportation, housing occupancy, and types of structures. It also provides context for these details, such as how they compare to other parts of the same state.

The Federal Reserve also offers a treasure trove of searchable information.

Getting familiar with economic shifts

You need to know more than who lives in the area you’re targeting. Your market analysis must include an economic history so you can prepare for future shifts.

Stay up-to-date with local business and employment developments. If a major employer is closing or laying off workers, the local economy suffers—after all, former employees have less purchasing power and may also have to leave the area to find jobs.

On the other hand, if a new company is coming to town, what types of jobs will be available? Blue collar? White collar? What kinds of homes will those employees be able to afford? Anticipate their needs and preferences to greatly improve the effectiveness of your investment strategy.

Check the U.S. Bureau of Labor Statistics for important information on how a specific area rates for job quality and availability.

Mortgage rates

Shifting mortgage interest rates have a huge impact on real estate markets . Rates directly affect how much home you—or your buyers—can buy. Use a mortgage calculator to determine the right balance between the amount you borrow and the monthly payments you can afford.

Monitor Federal Reserve activity and local lenders’ marketing to stay on top of the best rates to meet your investment goals. Keep in mind that the lower rates go, the greater demand for real estate, which drives up prices.

Government policies and subsidies

Legislation can have a sizable impact on property demand and prices. This happens though tax credits, deductions, and subsidies that increase or push down demand. Monitor government actions that may impact inventory, benefit you as an investor, or affect particular types of property in particular areas.

During a recession, national economies slow down. Decreased gross domestic product GDP, higher unemployment, tighter credit, and reduced (or nonexistent) construction are all common. But investing during a recession can certainly be done! If you have readily available capital, you can benefit as an investor—after all, both real estate values and mortgage interest rates tend to fall.

Pay attention to economic forecasts so you can appropriately adjust your financial position to handle upcoming events and your risk tolerance.

Prepare for a market shift

Modify your investing tactics—not only to survive an economic downturn, but to also thrive! Take any recession in stride and never be intimidated by a market shift again with Recession-Proof Real Estate Investing .

Environmental concerns

A complete comprehensive market analysis or comparative market analysis of two locations should include environmental factors that can impact an investment. Any of these can affect tenant/buyer appeal, property value, insurance rates, and ongoing maintenance and upkeep.

• Location, boundaries, and neighboring properties. Do they add value? Do they fit with the rest of the neighborhood? Are there bodies of water or other natural features that add appeal?
• Air and water quality. Are there systemic issues? Is there industry nearby that could—or has—threatened the environment?
• Climate and weather. Have there been changes in normal patterns or increased numbers of extreme events? Is the area vulnerable to flooding, wildfires, hurricanes, or tornadoes?
• Topography and soil conditions. Is the property in a flood plain? Is there adequate drainage or excess runoff? Is there surrounding land suitable for future development?
• Transportation patterns. What’s the current status? Is it adequate? Will proposed plans enhance or interfere with easy access or traffic volume?

Consult with the Environmental Protection Agency (EPA), local environmental agencies and organizations, and local real estate agents for information.

Analyzing a market before rehabbing properties

Before rehabbing your new purchase, as with a fix-and-flip or BRRRR, there are a number of additional considerations to keep in mind.

A good guideline for flipping a property is to keep the purchase price and rehab costs at 70% , minus repairs , of the after-repair value (ARV) . That figure is less important when rehabbing for a rental, where long-term income and cash flow are more important.

Make sure all planned features, amenities, and upgrades are appropriate for the price point, the style of the home, the neighborhood, and the overall market. For example, a swimming pool might be common for southern California, but probably not in Vermont.

If you’re rehabbing to rent, keep a renter’s perspective. In other words, “good enough” may be just fine when it comes to fixtures and finishes. In a home for sale, you would consider more extensive—and expensive—upgrades since buyers are making a longer-term commitment to the home.

Also stay focused on upgrades and features that add value to the property, such as a new kitchen, updated bathrooms, or covered/garage parking.

How to use your market analysis

We’ve covered a very broad range of topics that help you get to know local economies and their real estate markets. It may be hard to make sense of so many different details and perspectives.

Here’s a practical example of how to put all the information together to use in the real world.

You see a report on the U.S. Census’s ranking of the country’s fastest-growing cities. One of them is a small community in the state where you grew up, so you decide to take a closer look.

The town is a suburb of a larger city with a half-million people, home to a well-known private university. That means there will be a fairly steady pipeline of prospective tenants, either students—perhaps not so desirable—or faculty.

You also discover:

• Census Reporter shows the median household income is in the top 15% for the state, probably due to the university and professionals who live in the suburb and commute to work in town
• There are slightly more multi-unit structures than single-family homes. Also, 90% of all housing units are occupied, and 20% of residents moved in within the last two years, which is a positive indicator.
• The NAR Housing Shortage Tracker indicates that the area needs additional units and may be experiencing a seller’s market.
• Articles in a local business journal describe ongoing municipal infrastructure upgrades and that a major company is considering bringing in a new logistics hub. Because the hub’s main focus will be warehouse operations, it will bring more blue-collar, low- and mid-level jobs to town than technology and executive positions.
• Days-on-market increased 10% last year, but that was because of higher mortgage rates and a local manufacturer that went out of business after 30 years. Since then, DOM is trending lower.
• Zillow and Redfin show listings in your price range in three different neighborhoods, but one has been trending lower for average sale price, so you eliminate that one from consideration.
• One of the other neighborhoods is within walking distance of a new commercial and cultural district. It’s very attractive, but you decide that increasing traffic congestion is likely to scare away the tenants you want to attract.

With all this information, you contact a local agent who is handling many of the listings in your prime neighborhood. You ask her about local rent guidelines and the status of a pending environmental ordinance you read about that could begin to impact home sales three months from now.

Based on her information and what you have to invest, you forecast expected cash flow to be almost exactly the same as your target amount. However, because of the uncertainty of the local environmental ordinance, and because mortgage rates are expected to drop slightly in the next quarter, you decide to wait and watch developments in the neighborhood for a few more months.

Starting with an understanding of the market—and the ability to identify and analyze similar properties—is essential to real estate investment success.

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Home » How To Do Real Estate Market Research

How To Do Real Estate Market Research

Every decision you make when investing in real estate is a brick in the foundation of your financial future. Yet, one misstep in market research can set your investment portfolio on shaky ground.

While you’re already familiar with the basics, mastering the art of comprehensive market analysis is what separates the successful investors from those left wondering what went wrong. This guide is crafted specifically for you, aimed at refining your skills in real estate market research.

With an emphasis on practical strategies and actionable insights, we’ll help you enhance your ability to make informed investment decisions and have greater confidence in your investment choices.

Understanding the Basics

Real estate market research involves a systematic approach to collecting, analyzing, and interpreting data about the property market . This foundational knowledge typically encompasses understanding property values, rental rates, local demand and supply dynamics, and broader economic indicators that influence the real estate landscape.

However, to truly excel in real estate investing, moving beyond these foundational concepts is crucial. That’s because the real estate market is dynamic, influenced by an array of factors from global economic shifts to local community developments.

Investors who limit themselves to basic research may miss out on critical insights that could dramatically impact the profitability of their investments. For instance, knowing about upcoming infrastructure projects or zoning law changes in a specific area can reveal potential investment opportunities well ahead of the market curve.

This level of insight allows you to anticipate market shifts, adapt your strategy accordingly, and make decisions that are both strategic and informed. In doing so, you’re not just following the market—you’re staying a step ahead, positioning yourself for success in a competitive landscape.

Step 1: Define Your Objectives

Before you dive into the depths of real estate market research, it’s imperative to clearly define your investment goals. Identifying what you aim to achieve with your investment sets the stage for a focused and effective research strategy.

For instance, if your goal is to generate immediate income through flipping properties, your research will need to concentrate on finding undervalued properties in markets where you can quickly renovate and sell at a profit. This requires a keen eye on neighborhoods with rising property values yet still offers opportunities to purchase below market price.

Conversely, if your aim is to secure long-term rental income, your focus shifts towards areas with sustained demand for rentals, such as cities with growing employment sectors or university towns. Here, understanding demographic trends and future urban development plans becomes crucial, as these will impact rental demand and property values over time.

Similarly, investors targeting capital growth will look towards emerging markets or areas poised for significant development, such as new transport links or commercial hubs, or tax lien investing . This strategy involves a more speculative approach, requiring comprehensive analysis of future growth indicators and potential risks.

This strategic alignment not only streamlines your research process but also enhances your chances of investment success. It acts as a compass, guiding your efforts towards the data most relevant to your aims, ensuring that every piece of information you gather contributes directly to achieving your defined objectives.

Step 2: Gather Macro-Level Market Data

Macro-level market data gives you a bird’s-eye view of the economy and its impact on the real estate sector.

Key macroeconomic indicators relevant to real estate investing include GDP growth rates, employment figures, interest rate trends, and inflation rates. These indicators can provide insights into the overall health of the economy, which in turn influences property demand, rental yields, and investment returns.

For example, a strong GDP growth often signals robust demand for both residential and commercial properties, while low-interest rates can make financing more accessible, increasing the purchasing power of buyers.

To gather this valuable macro-level market data, consider exploring the following sources:

• National real estate databases : These databases compile comprehensive information on property prices, trends, and transactions across the country, providing a solid overview of the market at a national level.
• Government reports : Government departments and agencies regularly publish reports and statistics on housing, economic development, and urban planning. These reports can offer authoritative data on economic indicators, demographic changes, and future infrastructure projects.
• Central Bank publications : Central Banks provide key financial data, including interest rates, inflation figures, and economic forecasts. Their publications can help you gauge the economic climate and its implications for the real estate market.
• Economic research institutes : Research organizations and think tanks often conduct in-depth analyses of economic conditions and policy impacts. Their findings can offer deeper insights into macroeconomic trends and predictions.
• International financial organizations : Bodies like the World Bank and the International Monetary Fund (IMF) release global economic outlooks and country-specific reports, useful for investors considering international real estate markets.

Step 3: Analyze the Local Market

After establishing a solid understanding of the macroeconomic environment, the next crucial step is to zoom in on the local market dynamics. The real estate market can vary dramatically from one location to another, and success often hinges on recognizing these nuances.

A deep dive into local trends provides insights into the specific factors driving demand and supply, property values, and rental yields in your target area. This localized approach enables you to identify unique opportunities and risks, tailoring your investment strategy to capitalize on the specific characteristics of the local market.

When analyzing the local market, consider these key indicators:

• Local employment rates : Areas with low unemployment rates tend to have stronger demand for housing, as more people can afford to buy or rent property.
• Population growth : Regions experiencing population growth usually see increased demand for residential properties, which can drive up property prices and rental rates.
• Infrastructure developments : New or planned infrastructure projects (such as transportation systems, schools, and hospitals) can significantly impact property values by improving accessibility and attracting more residents to an area.
• Real estate supply and demand : Analyzing the current inventory of available properties versus buyer demand can help you gauge market tightness and potential price movements.
• Rental yield trends : Understanding the average rental yields in an area can indicate the viability of buy-to-let investments and potential returns.
• Local government policies : Zoning laws, property taxes, and development incentives can all influence the attractiveness of real estate investments in a particular area.
• Neighborhood characteristics : Factors such as crime rates, school quality, and community amenities play a significant role in determining the desirability of neighborhoods.

Each of these indicators offers a piece of the puzzle, giving you a comprehensive view of the local market conditions. By systematically assessing these factors, you’re better positioned to identify areas with high growth potential, aligning your investment strategy with locations that offer the best prospects for capital appreciation and rental income.

Step 4: Understand the Neighborhood Dynamics

Neighborhood analysis is where the broader strokes of city or regional data are given detail and texture, highlighting not just where to invest but more precisely, which streets or blocks offer the best potential.

This granular approach unveils nuances that could significantly impact the desirability and, consequently, the value of properties. From walkability and local schools’ quality to community vibes and development trends, neighborhoods shape residents’ lifestyles and, by extension, dictate the supply and demand for housing.

For thorough neighborhood analysis, several online tools and platforms can be invaluable:

• Real Estate Platforms : Websites like Zillow and Realtor.com provide detailed property listings, historical price data, and neighborhood trends. They often feature reviews and ratings on various aspects of neighborhood life, from noise levels to traffic.
• Google Maps and Street View : Beyond basic geography, Google’s suite of tools can give you a virtual tour of neighborhoods, offering insights into the area’s aesthetics, amenities, and more, which can influence property desirability.
• Local Government and Planning Departments : Many cities have online resources that detail zoning regulations, future development plans, and community initiatives which can impact future property values.
• Crime Mapping Services : Tools such as CrimeReports or SpotCrime can offer insights into the safety of a neighborhood, a factor that significantly affects residential choice and property values.
• Social Media and Local Forums : Places like Nextdoor or Reddit often have community-specific threads where locals discuss neighborhood issues, developments, and general sentiment towards their area.

By utilizing these tools, investors can gather a wealth of actionable insights that go beyond numbers and statistics. Understanding neighborhood dynamics helps in predicting which areas are on the cusp of becoming the next sought-after places to live.

This level of detailed research can be the difference between a good investment and a great one, ensuring your decisions are informed by a comprehensive understanding of all factors at play.

Step 5: Evaluate the Property Itself

Once you’ve honed in on a promising neighborhood, the next critical step is to evaluate the property itself. This involves a thorough assessment of its condition, valuation, and rental prospects.

Begin by examining the physical state of the property. Consider its age, the condition of major systems like plumbing and electrical, and any necessary repairs or renovations. This not only affects the initial investment amount but can also influence long-term maintenance costs and the property’s appeal to future buyers or renters.

Valuation is another pivotal aspect of property evaluation. Comparing the property’s price to similar properties in the area, known as comparables, helps ensure you’re getting a fair deal and aids in forecasting potential returns.

However, determining the true value of a property goes beyond just its sale price. It includes understanding the rental income it can generate, factoring in the location’s desirability, and assessing market trends.

Given the complexity and importance of a proper evaluation, leveraging professional appraisals and inspections is invaluable. A professional appraiser can provide an unbiased estimate of the property’s market value, considering all variables from home condition to market dynamics.

Similarly, a thorough inspection by a qualified inspector can uncover issues that might not be apparent, such as structural problems or hidden damage, safeguarding your investment from unforeseen expenses.

Ultimately, evaluating a property thoroughly ensures you make an informed decision, grounded not just in the potential for financial gain but in a comprehensive understanding of the investment’s realities.

This step is about minimizing risks and setting a solid foundation for your investment strategy, ensuring that the property aligns with your objectives and stands to contribute positively to your portfolio’s performance.

Step 6: Conduct Comparative Market Analysis (CMA)

Conducting a Comparative Market Analysis (CMA) helps you understand how your target property stacks up against similar properties in the same area, providing insights into its competitive positioning, pricing strategy, and market demand.

A well-executed CMA can significantly enhance your decision-making process, enabling you to estimate the property’s fair market value accurately and identify investment opportunities with high return potential.

To perform a CMA effectively, follow these steps:

• Identify Comparable Properties : Look for properties that are similar to your target property in terms of size, location, condition, and amenities. These properties should ideally be within the same neighborhood or a comparable area and have been sold or listed recently, not more than 3-6 months ago, to ensure the market data is current.
• Gather Data on Comparable Properties : Collect detailed information on each comparable property, including sale price, list price, the number of bedrooms and bathrooms, square footage, lot size, unique features, and any other relevant details that might affect value.
• Adjust for Differences : No two properties are exactly alike, so it’s important to adjust for differences between your target property and the comparables. For example, if a comparable property has a renovated kitchen and yours does not, you would adjust the value of that property downward to account for this difference. Conversely, if your property has an additional bathroom, you would adjust its value upward.
• Analyze the Data : Once you’ve made adjustments, analyze the data to determine a price range for your target property. Look at the adjusted sale prices of the comparables to see where your property fits within the spectrum. This will give you a solid foundation to estimate a fair market value.

For instance, if you’re evaluating a three-bedroom house in a suburban neighborhood, you might select three recently sold properties with similar characteristics. Suppose one sold for $250,000 with a renovated kitchen, another sold for $240,000 with an additional half bathroom, and the third sold for $230,000 in its original condition.

If your target property is most similar to the third property but also has a renovated kitchen, you might adjust its value upwards, estimating its market value to be around $245,000 to $250,000, accounting for the kitchen renovation.

This analytical process not only aids in determining an appropriate offer price but also helps in setting realistic expectations for potential returns on your investment.

Mastering Real Estate Market Research

From defining clear objectives, gathering macro-level data, analyzing local market dynamics, understanding neighborhood specifics, to evaluating properties and conducting comparative market analyses—each step is a building block in your strategy to identify lucrative investment opportunities.

The importance of meticulous market research is the compass that guides your investment decisions, helping you to minimize risks and maximize returns. By applying the techniques discussed, you’re not just making educated guesses, you’re backing your moves with solid evidence and strategic analysis.

Here’s to your success in making well-informed investment decisions that lead to substantial growth in your real estate portfolio.

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Handbook for Real Estate Market Analysis

Having a real estate market analysis strategy is an important part of real estate investing. Knowing which metrics to look at and how to use online tools and in-person visits can help you decide if a deal is right for you. This guide covers the best practices for conducting a real estate market analysis based on my experience syndicating over $1 billion in apartments in multiple markets in the US.

But it’s important to note that while identifying a strong real estate market is important, it isn’t a guarantee of success. Something you hear a lot in real estate investing is, “Location, location, location. The location is the most important factor that determines the success of a deal. You make money buying in the right area and lose money buying in the wrong one.”

While I get the sentiment, this is only partially true.

Yes, you can lose money buying properties in the wrong real estate market. But you can lose money buying in the right real estate market, too. Your investment team is far more relevant to the success of the deal than the real estate market. An apartment syndicator can buy a deal in the hottest real estate market in the country but lose their passive investors’ money by overpaying, failing to implement the business plan, making incorrect underwriting assumptions, or for any other number of reasons. At the same time, another apartment syndicator can buy a deal in a real estate market that is horrible on paper and double their passive investors’ capital if that is what they specialize in, and they can find deals and buy at steep discounts.

With that said, all other things being equal, you will likely make more money investing in a good real estate market than in a bad one. As a result, apartment syndicators should spend a lot of time on real estate market analysis—both prior to and after investing.

The best strategy for real estate market analysis is a combination of online and in-person analysis. Here is a quick rundown of the ideal approach:

Online real estate market analysis: Review the established or up-and-coming real estate markets across the US and narrow them down to a handful of markets. Then, perform a more in-depth analysis of these markets. This includes doing a lot of online research, reviewing commercial real estate reports, analyzing raw demographic and economic data, and catching up on local news (both general and business news).

In-person real estate market analysis: Visit the market in-person for a boots-on-the-ground analysis. Drive around the real estate market, looking for the best neighborhoods, visiting properties, and meeting with local commercial real estate professionals.

Based on your online and in-person real estate market analysis, select one or two real estate markets to target.

Apartment syndicators should follow this approach both when selecting a real estate market for the first time and when they are ready to expand. But what metrics should they be looking at during their online and in-person real estate analysis?

What is the right real estate market to target?

The real estate market you target shouldn’t be a metropolitan statistical area (MSA) nor a city. Instead, you should be targeting a submarket within an MSA or city. A neighborhood within a submarket is even better. Data on the entire city or MSA can be misleading due to the amount of territory included in the information, so the more specific the area the better.

For example, the population of New York City is over 8 million, and its footprint is nearly 500 square miles. It is broken into five boroughs, each with hundreds of neighborhoods. A few neighborhoods will align with the overall market statistics of the entire city, but most will be either better or worse. The only way to know for certain is to analyze the neighborhood.

Therefore, the best practice for a real estate market analysis is to focus your online research on finding the best MSAs and cities in the US, as well as the best submarkets within the large MSA or city. Then, focus your in-person, boots-on-the-ground efforts on finding the best neighborhoods in those top submarkets.

Finding the Nation’s Top Real Estate Markets

A best practice I use with my private apartment syndicator clients is to select seven real estate markets to analyze. I always recommend that at least three are real estate markets they are already familiar with, two are within driving distance, and two are considered “top market.”

The first two categories are self-explanatory, but how do you find the “top markets?” A best practice is to leverage the market analysis of the top commercial real estate investment institutions in the country.

These institutions invest a lot of time and money into creating monthly, quarterly, biannual, and annual real estate historical and forecast reports. Some of my favorites are:

• Marcus and Millichap’s quarterly market-specific reports
• Marcus and Millichap’s annual multifamily investment forecast
• CBRE’s quarterly cap rate survey
• Deloitte’s commercial real estate outlook
• IRR’s commercial real estate trends report
• PwC’s emerging trends in real estate report
• IPA’s annual multifamily forecast
• IRR’s annual multifamily report

Review these reports to see which real estate markets the big players are focusing on to select the final two target real estate markets.

The next step is to narrow your list down to one or two markets. The best practice is to perform a detailed online real estate market analysis, finding relevant data on the demand of multifamily in those submarkets. I’ve found that the metrics that best indicate demand are:

Population demographics

• New and existing businesses
• Top industries
• Absorption rates
• Unemployment
• Occupancy and rent trends

Population age: Different demographics demand different types of apartment communities. For example, Generation Z (born 1996 and later) desires smart amenities, affordability, and communal spaces. The Millennial generation (born 1977 to 1995) prefers resort-style living experiences and high-tech amenities and services. Generation X (born 1965 to 1976) prefers urban areas, high-tech home furnishings, concierge services, and family-friendly features. Baby Boomers (born 1946 to 1964) prefer larger living spaces, state-of-the-art fitness centers, and common areas. Understanding the dominant generation in the target market will let you know what the most in-demand properties are.

For demographic trends, and all other market data, I recommend analyzing at least the last five years. That way you can determine how the metrics are trending. Most of this data is located on the Census.gov website unless otherwise indicated.

Population growth: The more people moving to an area, the greater the demand for housing. A good resource to use is U-Haul’s annual migration study. They rank each state in the US based on the number of one-way U-Haul trips. Census.gov also has detailed data on annual population trends.

New and Existing Businesses

Fortune 500 companies: If a multibillion-dollar company is moving their headquarters to a market, they are doing so because they’ve determined through research that it is the ideal location. The market is pre-qualified in a sense. Looking forward, this will also result in an influx of new jobs and new potential renters as well as other businesses moving into the area.

Go to Google News and search “[target market name] + Fortune 500” to see if any large corporations are moving or have recently moved to the area.

Other businesses : Smaller businesses moving into the market is also a positive sign. While not as positive as a Fortune 500 company moving into the area, this will still result in new jobs and new potential renters.

Go to Google News and search “[target market name] + new businesses” and “[target market name] + new jobs” to see if any smaller corporations or business are moving or have recently moved to the area. New business news is also usually included on local Chamber of Commerce and Economic Development websites.

Top Industries

If a large portion of the population works for one company, or even just a few companies, the market is riskier. If the company or companies decide to leave, this will have a major negative impact on the market. Similarly, the market is also riskier if many people work in one industry. If that job industry were to decline or disappear, it would have a major negative effect on the market.

Ideally, the real estate market does not have one or only a few dominant companies and no more than 25% of the population is employed in a single industry.

Google “[target market name] + top employers” for a list of the major corporations in the area. The industry breakdown can be found on the Census.gov website.

Absorption Rate

The population is the demand. The apartment communities are the supply. Both are important in determining the strength of the market. The ideal situation is if construction cannot keep up with the growing population. The worst-case scenario is a lot of new apartment construction and a declining population.

The metric that best measures the supply situation in a market is the absorption rate. The absorption rate is a ratio of the number of units rented to the number of available units over a given period of time. The higher the absorption, the less supply can keep up with demand.

Integra Realty Resources (IRR) publishes yearly multifamily reports that label US markets being in an expansion, hyper supply, recession, or recovery phase. The markets in the hyper supply and recession phase have poor supply and demand metrics. One of the metrics included in their analysis is the absorption rate.

Fannie Mae also publishes absorption rates in their biannual multifamily market outlook reports.

The more people who are working, the greater the supply of high-quality renters who are capable of paying their rent on time. Markets with higher unemployment rates are fine as long as it is decreasing. The worst-case scenario is a target market with a high, increasing unemployment rate over the previous five years. Ideally, the target market has low, decreasing unemployment rate over at least the previous five-years.

You can find unemployment data on your target markets on Census.gov .

Occupancy and Rent Trends

Occupancy rates and rental rates are also a measurement of supply and demand. The greater the demand, the greater the occupancy rate and rental rates. The best real estate markets have increasing apartment occupancy rates and increasing apartment rental rates over at least the previous five years.

Occupancy and rental rate data can also be found on Census.gov .

Narrowing down your real estate market analysis

Once you’ve gathered your data, rank your seven real estate markets based on the metrics outlined above. The most important metrics are related to supply and demand (absorption rates, occupancy, and rent trends) and job diversity (top industry). Therefore, I recommend ranking each market based on those metrics and then, assuming the other metrics aren’t disqualifying (i.e., a massive unemployment rate, a plummeting population, etc.), using the other metrics as tiebreakers.

Performing an In-Person Analysis

Once you’ve narrowed down the list to the one or two markets with the best supply/demand and job diversity, move forward with the in-person, boots-on-the-ground real estate market analysis to find the best streets within the best submarkets/neighborhoods.

To accomplish this, start by meeting with local professionals to find the best submarkets/neighborhoods. Then, visit properties to find the best streets.

Meet local professionals: There may be tens or hundreds of submarkets/neighborhoods in any one market. The most effective way to narrow them down is to ask local real estate professionals for their opinions. The best professionals to speak with are property management companies and commercial real estate brokers. They are actively managing and selling apartments every day, which means they are experts on the market.

Contact at least three local property management companies and three commercial real estate brokers. A simple phone call will suffice to start. Explain your investment criteria (i.e., what types of apartments you invest in) and ask them for the top submarkets/neighborhoods in the market to focus on.

Once you have a list of a handful of submarkets/neighborhoods from the local experts, focus on becoming an expert on each submarket/neighborhood.

Visit properties: I have my apartment consulting clients begin the process of becoming an expert in a submarket/neighborhood by finding and logging information on actual (yes, real) properties in the market. I recommend a total of 200 properties for each market. Thus, the exercise is called the 200-Property Analysis. The purpose of this exercise is to have street-by-street-level expertise on your target submarket/neighborhood. Plus, you may target these properties with off-market lead generation strategies in the future, so it is not only an academic exercise.

To being the 200-Property Analysis, create a spreadsheet to track the following 17 data points:

• Market Name
• Property Name
• Property Address
• Submarket/Neighborhood
• Total Units
• Rentable Square Footage
• One-Bedroom Rent
• Two-Bedroom Rent
• Three-Bedroom Rent
• Who Pays Utilities?
• Owner Address
• Appraised Value
• Year Purchased

Using Apartments.com, you can generate a list of well over 200 properties in a market, as well as find data to complete most of the spreadsheet. I recommend finding properties that are scattered across the submarket/neighborhood rather than a concentration of properties in one area. Remember, the goal is to learn about the market and find the best neighborhoods.

I am a value-add apartment syndicator and teach others how to be the same, so we want to know if the property is a potential value-add opportunity. One strategy I like to use is to look at pictures to see if the interiors look outdated or if there is only one photo listed. If the interiors have been recently upgraded, the owners of the apartment will likely list a bunch of pictures to highlight the renovations.

Another strategy is to determine whether the owner pays the utilities. This indicates an opportunity to bill back utilities to residents via a ratio utility billing system (RUBS) program to increase revenue.

In addition to Apartments.com, you will need to locate the apartment on the local county auditor/appraiser site to find the owner contact information, appraised value, and year purchased.

This may seem like an arduous process, but no two streets are the same in a real estate market, and this can save you and your investors from years of headaches because of acquiring an asset on the wrong street or in the wrong neighborhood.

Once your spreadsheet is completed, print it out and set aside at least one weekend to visit as many properties on your list as possible.  At the property, you will want to perform the following tasks:

• Take a general picture of the property: You will be viewing many properties, so this main image will be your visual reminder.
• Take another picture of something noteworthy: Examples would be large green spaces, fresh landscaping, newly paved parking lot, and/or an interesting monument or signage. Be creative here. When you eventually begin reaching out to owners to see whether they’ve interested in selling, you can bring up this noteworthy item during the conversation.
• Look for any signs of distress and take pictures of anything noteworthy: Examples would be an uncovered pool in the winter, a pool closed for the summer, poor landscaping, peeling paint, old roofs, and old HVAC systems. Signs of distress relative to other assets in the same area signal a potential value-add opportunity and/or a motivated seller.
• Number of cars in the parking lot: This is important, especially during the day, since it will indicate the employment situation at the property.

This will give you an understanding of the types and quality of apartments in each neighborhood.

Drive around the real estate market: While you drive between property visits, pay attention to your surroundings to get a “feel” for the overall neighborhood and each street.

A great strategy is to print out a map of each neighborhood. Bring a green, yellow, and red highlighter. Highlight the map green to denote a “great” street, yellow for “okay,” and red for “avoid.”

Other things to look for when driving between properties are:

• Starbucks/McDonald’s: these businesses are nearby for a reason
• Parks and trails
• Schools: especially in “family friendly” markets
• Entertainment hubs
• Restaurants
• Major highways and roadways: this means the location has ease of access to jobs
• Traffic: could be a good thing because of walk-ins
• Road quality: a lot of potholes and trash or newly paved
• Quality of cars: indicates the resident type in the area

Another best practice is to drive the neighborhood at night to see how “safe” the area feels.

Based on the in-person analysis, you should have a better understanding of which neighborhoods are the best.

Another recommendation is to set up Google Alerts for target markets you are interested in. Just because a market is qualified today, that doesn’t mean it will remain qualified this time next year. Therefore, use Google alerts to receive automated email updates on any changes, good or bad, in specific markets.

Good keywords to set up for each prospective target market are:

• Multifamily
• Real estate
• New business
• Fortune 500

Real estate market analysis summarized

In summary, the real estate market itself is not as important as your ability to implement your business plan. However, selecting the right real estate market does increase the likelihood of preserving and growing your passive investors’ capital.

Therefore, to select the best real estate market, follow my tried-and-true real estate market analysis:

• Select seven real estate submarkets
• Perform online analysis to rank these real estate submarkets
• Narrow your list down to one or two real estate submarkets
• Perform in-person, boots-on-ground research to locate the best neighborhoods

And now that you have your analysis in place, start building a successful Real Estate Capital Markets group .

Back to the Learning Center

How To Do a Real Estate Market Analysis Like an Expert Investor

Sooner or later in your real estate investing career, you’ll find yourself having to decide which of several promising markets to invest in. Each property provider (home builder, turnkey provider, real estate agent, etc.,) will tell you their market is the best and why you should invest there.

What you need is a way to do a real estate market analysis so you can decide where to place your bets. In this article, we’ll discuss six attributes of a good real estate market:

• The numbers work
• Good property management
• Diverse local economy
• Population growth
• Investor-friendliness

A Real Estate Market Analysis in Two Primary Steps

Step 1: initial screen, #1: the numbers work.

My first screen when doing a real estate market analysis is: Do the numbers “work” in this market?

Some markets have a poor rent-to-value ratio i.e., the rents are low relative to purchase price, so you’ll have negative cash flow. That doesn’t work for me. I want a market where the properties pay for themselves while I’m building equity.

To illustrate, compare the metrics for San Francisco, CA vs. Port Charlotte, FL, near Ft Myers:

This is an extreme example, but it illustrates how the numbers don’t work for a city like San Francisco. The purchase price is so high relative to the rent that it has negative cash flow of almost $5,000 per month.

The old rule of thumb was the “one-percent rule” which states that, ideally, you’d want the monthly rent to equal 1.0% of the property’s purchase price e.g., $1,000/month for a $100,000 property. That 1.0% ratio is very hard to achieve in today’s market, but at current interest rates, a property would need a rent ratio of at least 0.6 or higher to break-even. The Port Charlotte property has a rent ratio of 0.67 ($2,300/$345,000).

(Also note that, for the same amount of money, you could buy four brand-new houses in Port Charlotte for the price of one, 100-year-old house in San Francisco!)

For me, the numbers on the San Francisco property just don’t work. Imagine losing your day job and having that much negative cash flow! That said, a lot of people have made a lot of money in California real estate by accepting the negative cash flow and banking on price appreciation.

If you’re less risk-averse than I am, just remember that you’re getting a sure thing (negative cash flow) in exchange for a not-so-sure thing (future appreciation).

Also, if you’re looking at properties that have only $200/month in negative cash flow, you may decide you can live with that. You have to decide what numbers work for you or not.

Data sources:

• Whoever is selling you the property should have a proforma financial statement itemizing rents and net cash flow after expenses;
• You can do a sanity check on those proformas by going to Zillow.com to check housing prices and rents in the same zip code you’re considering buying in. Confirm that the seller’s numbers are realistic.

#2: Good Property Management

The most common reason real estate investments fail is poor property management, so I always recommend investors identify at least two good property managers in any given market. That way, if the first one doesn’t work out for whatever reason, you’ve already identified a backup.

The property management company should be a real company, not a mom-and-pop operation out of someone’s house. There should be a “deep bench” of managers, leasing agents, handymen, etc., so service won’t be interrupted if someone’s on vacation or if there’s personnel turnover.

Note: Requiring two good property management companies may effectively eliminate smaller metros. It’s hard enough to find one good property management company but finding two such companies in a metro with a population of less than 100,000 can be difficult.

• Your property provider should have a recommended property management company, so you should evaluate them and see if they’ll work for you. To find a second (backup) property manager, you can:
• Go to Yelp.com and search for “residential property management” and “city name” and look at the ratings. Many will have negative ratings from disgruntled tenants, so focus on the ratings by landlords;
• Go to Meetup.com and search for real estate investor clubs where the property is. Email the Meetup Group organizer and ask for recommendations.

If you can’t find at least one and preferably two suitable property management companies, then you should stop there and pass on that market.

#3: Diverse Economy

Not having a diverse economy is a deal-breaker for me personally, so I’m including it in this initial real estate market analysis screen. If it isn’t a deal-breaker for you, you could save this attribute for the next section.

My reasoning is that single-industry metros like Detroit or Las Vegas tend to get hit harder during recessions. When times are bad, the first thing consumers cut back on is discretionary spending like a new car or a trip to Vegas.

Worrying about whether my tenants will lose their jobs with every downturn in the economy is one more wild card I don’t want to deal with. I want to limit the number of variables outside my control.

Data sources: You can determine how diverse a local economy is by going onto Google and searching on “city name” plus “top 20 employers” and look at the number of jobs in each industry. For example, compare the results of Atlanta vs. Detroit:

Atlanta ’s major employers are all in different industries: Delta Airlines, Home Depot, UPS, Coca-Cola, Emory University, Center for Disease Control, SunTrust Bank, Georgia Tech, AT&T, Marriott, and countless hospitals.

By contrast, although it’s trying to get more diverse, the bulk of jobs in Detroit are still in the auto industry: Ford, Fiat-Chrysler (Stellantis), General Motors, Magna International (auto supplier), Quicken Loans and health care.

With a diverse economy like Atlanta’s, if one sector of the economy is struggling (e.g., Delta Airlines during the Covid pandemic), then other sectors of the economy can pick up the slack. That makes for a more resilient market and more stable cash flow for investors.

Step 2: Deep Dive

Ok, at this point we’ve eliminated the markets that don’t meet our initial real estate market analysis screen without investing too much time on them. Now we can do a deeper dive on the “semi-finalists” that passed our initial screen.


#4: Job Growth

New jobs in an area are a bullish sign for that area’s growth because someone has determined that the business climate there is promising enough to make the investment.

For example, Intel is currently building a chip factory just northeast of Columbus OH that will create 3,000 jobs starting in 2025. Those are high-paying jobs and will pump lots of money into the local economy, including its real estate.

This is the kind of market you want to invest in.

• The seller of the property you’re investing in will have information if jobs are moving to the area as part of his “pitch” for why it’s a good place to invest.
• Check the city’s Chamber of Commerce website for press releases about new jobs
• Google “what companies are expanding in “+ “city name”.

Tip: Make sure you locate where on the map the new jobs are coming in. An Intel plant northeast of Columbus will likely have no effect on housing demand in southwest Columbus. Consider commuting distance and traffic patterns when determining where to invest.

#5: Population Growth

Though job growth usually results in population growth, the two are not always in sync, so they should be tracked separately.

For example, parts of Florida are popular destinations for retirees, so their population growth is greater than their job growth, since retirees don’t need jobs. In other places with high unemployment such as Detroit, a new Amazon warehouse might create new jobs but not increase the population, because there are enough unemployed people there to absorb any job creation.

A growing population is important because it means demand for housing will go up, which means rents and property values will likely go up. Data sources:

• Again, whoever is offering to sell you the property should have information on this.
• Other information sources vary from city to city, so Google searches are your friend here.
• To save you time, here’s a list of the top 40 fastest growing metros in the US from 2023 – 2060 . Note that The Villages, FL (the largest retirement community in the country) is #1.

Sometimes you can find city-specific information by searching on “city name” + “population growth forecasts”. Here’s the Orlando forecast:

Image Source : Macrotrends.net

Note that though the rate of growth is slowing (bottom graph), the metro is still expected to grow by 400,000 people in the next 15 years.

Tip: In addition to the quantity of population growth, you should also consider the quality of population growth. Many retirees in Florida bring lots of capital with them, so it’s not just the number of bodies that matters but also the amount of money they can pump into the local economy.

Retirees with money will sell their homes in New York and buy homes in Florida all-cash, and spend money in restaurants, golf courses and for entertainment. Follow the money.

#6: Investor Friendly

Our last desirable attribute for a market is that it be investor-friendly, namely one that makes it easy to do business there.

Some markets have high property taxes (Houston); others require a city inspection every time a property is sold (St. Louis); others have a time-consuming process to evict non-paying tenants (San Francisco).

While these may not necessarily be deal-breakers for you, you should be aware of the business climate before investing. This is why I’m including this tip for your real estate market analysis.

Other Investors

• Look up Real Estate Investor Associations (REIAs) or real estate investing Meetup.com groups, and find investors who own properties in multiple cities. An investor in only one city knows only his market and what he thinks of as “normal” in his market might be very abnormal when compared to other markets you’re considering.

Your property manager

• Similarly, you shouldn’t ask your property manager “Is this city investor friendly?” because she may not have anything to compare it to. Instead, you should ask very specific questions.
• How long does it take to evict a non-paying tenant? What’s the process and how much does it cost?
• Does the city require periodic inspections? How long does that take to schedule and complete?
• How often are property taxes reassessed?

Then compare those answers to the answers from other markets you’re considering and decide what market you’re most comfortable with.

This back-of-the-envelope market analysis may seem like a lot of work at first, but after you’ve done it a few times, you’ll find you can do your initial screening in about 10-15 minutes. The deeper dive could take a little longer.

Performing this real estate market analysis will give you the confidence you need to stop “analysis paralysis” and start investing.

Final Thoughts

Few markets will “check all the boxes” and provide the perfect place to invest. If there was such a market, it’d be too hard to get property there because all the Wall Street private equity funds would be snapping them up.

You’ll have to decide for yourself what criteria are your “deal breakers” and use those in your initial screen.

The only non-negotiable in my opinion is property management: If you can’t find good property management, your investment is almost certain to fail. All the other criteria are up to you.

But knowing that the numbers work, knowing that there’s good property management, a diverse economy, job and population growth and an investor-friendly environment will help you pick the best markets for you.

Happy investing.

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How to conduct real estate market research?

• November 22, 2022

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It is always recommended to conduct market research in real estate before investing. This will not only help you in grasping the current housing market trend but will also guide you to the best time to invest.

In this blog, you will learn how to conduct real estate market research and how you can benefit from it.

What is real estate market research?

Real estate market analysis is simply the process of acquiring a good comprehension of the real estate market.

Real estate market research should always be performed, whether purchasing or selling a property. It is because it will assist in understanding the real estate market trend, comparing properties, whether it is an investment decision, how much you can charge for rent, and so on.

A real estate market study provides information that helps sellers pick a listing price and buyers determine if the list price is too high, too low, or appropriate.

Example of real estate market analysis report

According to a report by Statista , the wellness real estate sector in India has valued at over 134 billion US dollars in 2017. It is expected to reach approximately 200 billion US dollars by 2022.

Wellness real estate was propelled by rising demand in both commercial and residential real estate. Recreational amenities on residential or commercial complexes, such as gymnasiums, sports courts, spas, or yoga studios, can be components of wellness real estate. Greenery, pathways, and parks inside a complex that impact the health of residents and workers were also counted.

In the next section, you will learn the importance of conducting real estate market research.

Why conduct real estate market research?

There are many reasons to conduct real estate market research. Some of them are:

1. Real estate market research helps in lucrative investments

In an uncertain world, real estate trends bring a sense of security and tranquility. Unlike other investment opportunities that need substantial business knowledge, even novices may profit from real estate potential, especially with the help of renowned real estate tools.

2. Real estate market research assists in identifying demographics

Market research reports are a valuable source of information since they contain statistics on population growth, job growth, employment prospects, education levels, life quality, local housing market activities, and other topics.

3. Real estate market research helps in the comparison of prices

It will be easier for you to estimate the worth if you compare the property to others in the neighborhood and look at aspects like size, cost, and other factors.

4. Real estate market research aids in understanding trends

Effective market research not only facilitates access to the real estate market, but it may also increase profitability. Analyzing localities, their economic and sociological trends, as well as supply and demand patterns, allows you to better estimate property value and purchase and sell when the situation is actually right, not just convenient.

5. Real estate market research provides safety nets against inflation

Real estate housing market is among the finest investment alternatives due to its minimal risk and potential for significant returns. It protects against inflation as pro

What factors affect real estate market value?

Real estate market value is affected by several factors. They are as follows:

1. Location

Location is critical since it may influence crucial real estate market statistics. Real estate market research is the same as property analysis. The location and neighborhood, lot size, building duration, services and facilities, and so on should all be considered.

2. Commercial trends

Although social media, blogs, and communal websites are not the most “professional” of sources, they are worth investigating for commercial trends. There is a wealth of open data on the internet that will provide you with an unbiased picture of the real estate market. Use it to learn what its genuine inhabitants think about living there.

You may determine the market price of your home using various online tools. As these are just market value estimations, they may not be completely accurate, especially if the house has been modified. It does, however, give purchasers a glimpse of the real estate market in which they want to invest.

The next section is about how to do real estate market research.

Following is a step-by-step guide to conducting your market research effectively.

Step1 – Study the market on a global scale

You’ll be curious about where the real estate market will be in 5, 10, and maybe even 20 years. To do so, you must first analyze where the market has been.

The goal is to have a better understanding of the market volume, trends, and probable evolution. The following questions will help you gain a better understanding of the market position and the parties involved.

• What are the current housing market trends?
• What kinds of terms and conditions can my prospective suppliers provide me? Who are they?
• What do the upcoming years hold for this property?

Step2 – Evaluate customers’ potential with a survey

Knowing the market’s consumers and determining whether there is potential to capitalize on it by examining demand are the goals of the subsequent stage.

This can be done by conducting a real estate market survey. Some of the questions may include

• What are the critical factors that influence a buying decision? What is their financial situation? 
• What is the average customer consumption rate? 
• How many customers are there in the research real estate market?

Step3 – Examine the proposals made by rivals

Market research for real estate will provide you with a clearer idea of what is necessary for success and what is not. It entails thoroughly researching what your competitors already provide in the industry.

You can find possibilities to plan your future products and acquire competitive advantages by carefully examining your competitors’ product lines.

Step4 – Conduct environmental analysis

It’s not enough to only look at a house’s physical characteristics; you also need to consider the characteristics of the community and the real estate.  As an alternative, it entails assessing broad environmental factors as well as public utilities and services. Water resources, transportation, technological advancements, and other elements are among them.

Step5 – Send out the survey and gather data

A survey gives you real-time knowledge about market needs including price, style, and ways to engage your intended audience.

Now is the time to send your real estate market research survey and gather all the data you need. Make sure that the data collected is valid and unbiased.

You may conduct your survey both online and offline easily using online survey tools . For better response rates, ensure to optimize the survey for mobile users .

Step6 – Analyze the data

Once you’ve obtained all the data you want, it’s time for the impressive part: data analysis. Although one element of information or data may stand out, it is more essential to search for patterns than single pieces of information. Don’t try to detect patterns in your data based on assumptions you made before collecting it.

You can use survey software to see the gathered data in real-time, which aids in pre-analysis and report preparation.

Having learned the necessary steps, let us now explore some benefits of real estate market analysis.

Benefits of real estate market analysis

Here is a list of some of the benefits that real estate market research provides.

1. Provides demographic

Real estate demand is inevitably influenced by shifting cultural norms and demographic cohorts, prompting changes in neighborhood life cycles and generating supply and demand mechanisms that both increase and decrease local financial margins.

2. Boosts demand

Real estate is subject to the law of supply and demand. Prices rise when the number of buyers is more than the available homes. As a result, prices fall, increasing the demand for the property.

3. Economic stability

Real estate market research assists in identifying trends that may affect property value. Baby Boomers are currently retiring, and as more Millennials start to find their careers, they are becoming more financially secure. 

You may choose when and how to spend or save money by understanding the trends that may affect demand and purchasing behavior.

Whatever the situation may be, it should come as no surprise that competent real estate market research may assist potential investors in selecting a home that is not only feasible in the here and now, but also capable of producing a profit for them in the future.

You can use Voxco’s agent evaluation survey template to gain a better understanding of your real estate easily.

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Comparative Market Analysis: A Complete Guide to CMAs

Table of Contents

A comparative or comparable market analysis (CMA) report provides an estimate of a home's fair market value by comparing the recent sale prices of similar properties located nearby.

CMAs are a valuable tool for both realtors and their clients, helping sellers determine a fair listing price and allowing buyers to submit competitive offers . While you can complete your own CMA , an experienced realtor can provide the most accurate numbers (and do it for free).

Here's what you need to know about CMAs, including how to get a free CMA , how agents determine your home's value, an example of what the report looks like, and a step-by-step approach to completing your own CMA.

Home sellers : CMAs can help you price your home competitively and give you a better idea of your potential net proceeds in a sale. A detailed report provides useful local market information to help set your listing price and create a marketing strategy, including:

• Recent sale prices of similar or "comparable" homes in your neighborhood or subdivision.
• How long it takes for similar homes to sell after going live.
• What homes sell for compared to their asking prices.
• How much value a home's upgrades or renovations add.
• A summary of the features of each sold home, including square footage, bedrooms and bathrooms, and acreage.

Match with top-rated agents from brand-name brokerages, like Keller Williams and RE/MAX, and request a free CMA today! Sellers will save thousands in realtor commissions with pre-negotiated 1.5% listing fees.

Clever's service is 100% free with zero obligation. Interview as many agents as you like until you find the perfect fit — or walk away at any time.

Home buyers : Learning a home's estimated market value can help you submit a more competitive offer, protect you from offering too much (or too little) on a home, and stay within your spending budget.

Investors : Profiting on a house flip or rental property is all about getting your numbers right, making a CMA report a powerful tool for investors. CMAs can help you evaluate undervalued properties, protect against making a poor investment, and put you in a stronger negotiating position with sellers.

Refinancers : CMAs help homeowners determine if their home's value is high enough to refinance the mortgage. Lenders typically require homeowners to have at least 20% home equity to qualify for a refinance, so a CMA can help you determine if you meet that requirement.

If you want to run your own CMA without an agent's help, here's a basic approach to use by pulling sales data from the home buying website Zillow.

Step 1: Find homes in your area that sold recently

Type in your city on the Zillow search bar.

Check the box for "sold homes" to view only closed sales.

Choose a sale price range that's within what your home is likely worth.

Select a minimum bedroom and bathroom amount that's at least equal to your home.

Choose your home type (single family house, townhouse/condo, or multi-family).

Add a range of square footage that's within about 500 square feet of your home.

Under the "sold in last" tab, select homes that have sold within the past six months.

MORE: Step-by-step guide with pictures

• Fill in information on each Zillow tab, from left to right, to narrow down sold homes in your area.
• On the search bar, type in your city, and then on the next tab, check the box for "sold homes" to view only closed sales.

• Choose a sale price range that is within what your home is likely worth (using an online home value estimate is okay). For example, if Zillow estimates your home is worth $550,000, you can choose a range of $500,000 to $600,000.

• On the next tab to the right, select a minimum bedroom and bathroom amount that's at least equal to your home (don't select "use exact match," which will limit the amount of results).

• Choose your home type (single family house, townhouse/condo, or multi-family) and then hit done.

• Select the "more" tab and add a range of square footage that's within 500 square feet or so of your home. For example, if your home has 2,500 square feet, you can choose a range of 2,000 to 3,000.

• Scroll down to the bottom, and select the "sold in last" tab. Select homes that have sold within the past six months.

• Hit done, and zoom in on the map to view all sold homes in your area.

Step 2: Choose good comparable sales

Now that you've filtered through sold homes, you should have a pretty solid list of comparable properties to choose from.

Remember what factors make a good comp: Location, date of sale, size, condition, and age of home. It's also not a bad idea to browse through online photos to see if sellers made any interior or exterior upgrades.

Using this criteria, pick three homes that are most similar to your home and have sold the most recently.

Step 3: Calculate an average sale price

Let's say your search returns three solid comps that recently sold for $517,000, $544,000, and $555,000 in your neighborhood.

Based on the average sale price of the three comps, your home's fair market value is $538,667.

Measuring sales price per square foot is another way to estimate the value of your home.

To get an estimated value, you'll need to divide each home's sales price by its interior square footage.

A word on home value estimators

One popular way to estimate your home's current market value is by getting an estimate from an online home value estimator . These tools can be useful for getting a ballpark idea of your home's value, especially if you're not quite ready to talk to a realtor yet.

However, estimates like the Zillow Zestimate or Redfin Estimate aren't always accurate, so your numbers might not be, either.

One reason: Homeowners can change their home's listing information, including its number of bedrooms, bathrooms, and square footage.

Some homeowners might include an unheated basement in the home's total square footage – even if it's not included on the tax records – to make the house appear larger to home shoppers.

And while a bonus room or a finished basement adds to a home's value, rooms typically must have a door, a closet, and a window to be counted as a true bedroom (check a home's tax records to confirm information).

For a more precise home valuation, we highly recommend consulting an experienced realtor. A real estate agent who knows your local market will be able to perform a full CMA to give you the most accurate idea of your home's current market value.

Connect with the best agents from top brokerages in your area, and receive a free home valuation! In addition, when you list with Clever you'll also get:

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A CMA is essentially an agent's estimate of your home's competitive market value based on what similar homes have recently sold for in your area.

To prepare a CMA, an agent will typically choose three or more comparable sales — or "comps" for short — which are homes that are similar to yours in location, size, and features.

The agent will then adjust the sales prices of those comps for minor differences, such as square footage, bedrooms, and bathrooms, and average them to get your recommended list price.

This image shows a real-world example of a comparative market analysis that I completed for a home in Charleston County, SC. CMA reports may look different in other markets or states, but they all include the same basic information.

Note: Images are blurred for privacy.

The first two pages of a CMA report include photos and information about the subject property. The third page (image above) includes information on the subject property (second column), followed by three comparable sales in the area.

Each row includes information about the comparable sales, including distance from the subject property (in miles), list price, sold price, and date of sale, followed by various adjustments (bedrooms, bathrooms, and square footage).

The three comps chosen for this CMA closed within the past four months, sold in the same subdivision, and have a similar size, condition, and features to the subject property.

The following value adjustments were made:

• Bedrooms : The subject home has one more bedroom than the second comparable, and each bedroom is equal to $2,500 in value in its market.
• Total bathrooms: The subject home has a half bathroom more than all three comparables, adding $2,500 in value to its adjusted price.
• Square footage: The home has more square footage than each comparable. One square foot is equal to $40 in value in its market, adding between $14,880 to $28,600 in value to its adjusted price.

Property value adjustment amounts were determined by using a recent appraisal report on a similar home in the subject property's market.

To create a more in-depth CMA, the agent can choose to make more value adjustments, such as acreage, the type of garage, and interior and exterior upgrades.

The listing price recommendation is found on page 5 of the CMA. The subject home has an estimated fair market value of $528,773, which is an average of the adjusted prices of the three comparable sales.

MORE: Quick CMA page-by-page breakdown

While CMA reports vary in length, most will include a summary of the property in question, as well as information on comparable properties in the immediate area. Here's what you can expect to find on each page:

• Page 1: A map pinpointing the location of the subject property and comparable sales, with addresses and distance (measured in miles) from the subject home.
• Page 2: A photo of the subject property taken from a previous MLS listing, and key property information including its number of bedrooms and baths, square footage, lot size, and age of home.
• Page 3: A table with information on comparable properties including list price, sold price, date of closing, days on market, bedrooms, bathrooms, acreage, and year built, as well as any key adjustments in value.
• Page 4: A price analysis graphic showing list prices, sold prices, and adjusted prices for the comparable properties, as well as low, average, median, and high sold prices.
• Page 5: Summary of closed listings, repeating key information included in the previous pages, and an average sold price per square foot for every property.
• Page 6: Listing price recommendation (low, high, and recommended) based on the adjusted sales prices of each property.
• Pages 7-12: Individual MLS listing pages for each home. MLS listings may include information only available to realtors, including the type of financing used to buy the home, and if the seller paid any of the buyer's closing costs .

CMAs tend to be more accurate than home value estimators like Zillow – but CMAs are only as accurate as the most recent sales data (it's impossible to value a home accurately if no homes in your area have sold recently).

Who you choose to create your CMA report is equally important. Here are factors to consider when choosing an agent to run the numbers for you.

• Experience: A seasoned, full-time agent will likely create a more accurate CMA compared to a new or part-time agent, as they are more committed to their profession and have years of experience.
• Local knowledge: A local realtor will know the best comparables to choose, which sales to disregard, and how to properly adjust home values.
• Attention to detail: Agents who fact-check MLS information against a property's tax records get the most accurate source of information for square footage, bedrooms, and bathrooms.

CMAs vs. home value estimators

Various websites provide free online home value estimators . These sites provide a good starting point, but you shouldn't set a listing price for your home without getting a CMA from a licensed agent.

Redfin and Zillow are among the two most popular home valuation sites. For off-market properties, Redfin's home value estimator error rate is 6.71% [1] , while Zillow's error rate is 6.9% [2] .

In other words, a home with a fair market value of $500,000 could be misvalued by as much as $33,550 on Redfin and $34,500 on Zillow.

CMAs are often more accurate compared to online home value estimators for several reasons.

• Human vs. algorithm: CMAs are completed by a licensed professional who hand-picks the most relevant comparable sales, while sites like Zillow use an algorithm to pull comps automatically.
• Renovations considered: Online home sites can't see inside your home, so they probably won't know if you've renovated your kitchen or bathrooms, or made other value-enhancing improvements. An agent can give you credit for home renovations and upgrades.
• Fact-checking tax records: Realtors can pull information from a home's tax records to ensure that the correct information is used in the CMA report. Online sites sometimes pull the wrong or outdated information from online listings or the MLS.

But if you're just looking to get a ballpark idea of your home's worth, we recommend comparing estimates from several online home valuation tools.

Before putting your home on the market, it's important to know your home's true value. Our licensed concierge team will connect you with top-rated realtors to perform a free professional CMA on your property — from a trusted brand like Keller Williams and RE/MAX.

Compare top local realtors until you find the perfect fit, then pay just 1.5% in listing fees when you sell your home. Or walk away at any time with no obligation. Find a top local agent today!

CMAs vs. appraisals: What's the difference?

Both CMAs and pre-listing appraisals are used to determine the fair market value of a home, but they are not the same thing.

• CMAs are typically created by real estate brokers and agents before a home is listed for sale; appraisals are performed by a licensed appraiser during the mortgage underwriting process .
• CMAs provide an estimate of value and a listing price recommendation, while appraisals provide a documented opinion of value.
• Realtors often create a CMA before seeing a home in person, while appraisers inspect the interior and exterior of the home before completing the valuation.
• CMAs are free, while appraisals often cost between $400 to $500 or more, depending on the market.

» MORE: What is a home appraisal, and do I need one?

If you're thinking of selling your home and want to know what it could potentially fetch in a sale, you can get a free CMA from a local agent. There is no obligation, and we can connect you to top local realtors who can help.

Clever offers top-rated local agents, full service, pre-negotiated low rates for sellers, and cash back for eligible buyers.

You can also try doing your own CMA – the report probably won't be as accurate as one provided by a realtor, but it may provide you with a good starting point.

Learn how to complete your own CMA .

If you're ready to put an offer in on a home, it's a good idea to ask your agent to run a CMA.

Your agent should be able to provide you with a fair market value for the home based on recent home sales in the area.

Agents can show you what each relevant comparable home sold for, how long it took for them to sell, and if sellers paid any buyer concessions, like closing costs.

Talk to experienced real estate agents to discuss CMA reports and how to make a competitive offer on a house.

Connect with top local agents who can help you get a great deal on a new home. Eligible buyers also earn cash back after closing.

CMAs are useful tools for investors to find and analyze properties.

Investors can use CMAs to determine if a home is undervalued after factoring in all repairs needed to sell or rent out the property.

CMAs can help investors negotiate with sellers , too.

For example, a home that is less updated than its comps and in need of more repairs should carry a lower valuation. Showing a seller how you came up with your offer price may give you some leverage in negotiations.

» MORE: The ultimate rental property calculator

CMAs can be useful for determining your home's value to come up with a home equity percentage (you typically need at least 20% home equity to qualify for a refinance).

Realtors might not provide a free CMA report if you aren't planning to buy or sell anytime soon, so you have three other options:

• Order an appraisal: A home valuation from a licensed professional who follows strict guidelines established by the Uniform Standards of Professional Appraisal Practice (USPAP). Appraisals are expensive, and your lender may require another one during the refinance process.
• Order a broker price opinion (BPO): Like a CMA report, a BPO estimates your home's value based on its condition and the recent sale prices of similar homes located nearby. But unlike a CMA report, you might have to pay for a BPO ($150-$250).
• Complete your own CMA: The DIY route is free, but requires some legwork. You'll need to run the numbers yourself to get an estimate of your home's fair market value, to see whether or not it's worth pursuing a refinance.

» MORE: What is a broker price opinion, and do I need one?

Most real estate agents will give you a free CMA during a listing consultation as a way to win your business and help you set a fair listing price for your home.

To make sure your CMA is accurate and that you don't overprice or underprice your home, it's important to find the right agent . You want to go with a realtor who's highly qualified and knowledgeable about your local market.

Clever Real Estate can match you with top local agents from trusted brands like Century 21 and RE/MAX. You'll receive multiple hand-picked matches so you can compare your options and choose the agent with the best marketing plan and pricing strategy.

In addition, Clever negotiates exclusive savings on your behalf. You'll pay just a 1.5% listing fee in exchange for guaranteed full service from a traditional agent. Try Clever for free and interview as many agents as you want until you find the right fit — or walk away at any time with no obligation!

Is a comparative market analysis free?

Yes. Real estate agents often provide free CMAs as part of a listing presentation to prospective home sellers before a house is listed for sale. Learn how to get a free CMA .

Can I do my own comparable market analysis report?

You can do your own CMA reports by researching comparable home sales on real estate websites, such as Zillow or Realtor. But a local realtor can provide a more in-depth analysis of a home's value, and at no cost to you.

Is a CMA the same thing as an appraisal?

A CMA and appraisal are not the same thing. Real estate agents complete free CMA reports to provide an estimated home value for clients; licensed appraisers complete appraisal reports for banks or lenders who have ordered the report for home buyers.

What are the main criteria for selecting a comparable property?

• Location: Comparable properties should be located in the same neighborhood or subdivision as the subject property (and no more than a mile away).
• Date of sale: Homes sold within the past three months are ideal comps, and the sooner the closing, the better, given how fast the market can change.
• Size: Agents typically try to stay within 500 square feet of the subject home's square footage.
• Condition: A home and its comparables should have similar interior and exterior upgrades, and be in the same condition.
• Age of home: The closer in age, the better, as the market tends to value new and old homes differently.

What's the primary purpose of a CMA?

The primary purpose of a comparative market analysis (CMA) is to determine a property's value. Most real estate agents will perform a free CMA for sellers, allowing them to set an accurate listing price. A CMA can also help a buyer know whether a home is priced well, allowing them to make a competitive offer. Learn more about who should get a CMA.

I've been a real estate agent in South Carolina for three years (SC license number: 115238), during which time I've completed dozens of CMAs for prospective home sellers and clients. I'm also an active real estate investor, and have completed CMAs to analyze flips and rental properties.

I pulled information from colleague Trent Seigfried's research on online home value estimators. Trent is a data scientist and a writer whose work has appeared in Business Insider, Christian Science Monitor, US News and World Report, among other publications.

Related links

How to Find a Real Estate Agent That's Right for You

The Best Low Commission Realtors + Brokers

18 Easy Ways to Get Your House Ready to Sell

Discount Real Estate Brokers: How to Find a Top Realtor for Less

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How To Research A Real Estate Market (For Free)

Without access to a paid research database, market research can be pretty tough.

Companies like CoStar , Yardi Matrix , and Real Capital Analytics are all great resources to find real estate market data all in one place. But if you don’t have access to these sites through a company subscription and you’re looking to access this data on your own, subscriptions to these databases can be pretty costly for individual users, and usually don’t make sense for a first-time investor.

Fortunately, if you don’t have access to these databases, all is not lost.

There are a few great alternatives to these paid tools that you can find for free online to help you run a more accurate analysis of the deals you’re underwriting, and you don’t have to shell out thousands of dollars to do it.

So to help out with sifting through all the information that exists out there on the internet today, in this article we’ll walk through my top three free alternatives for market research that you can use to underwrite properties, and where you should be looking for each. You can also watch the video version here :

Real Estate Underwriting Breakdown

Real estate underwriting is a two part process.

Part one is making sure you have your current property information right. This includes your in-place rents, historical expenses, current vacancy, and anything else that is going to affect the operations of your deal from the time you take over the property.

But from there, once you have all of your in-place information in your model, part two can get a little bit more tricky.

This is the part where you’re starting to have to make projections about the future , which unfortunately isn’t as easy as using as-is information from a rent roll or T-12.

Getting these projections right starts to get really important, especially when you’re planning a major renovation or lease-up for a commercial deal. And with that, finding reliable information is a big part of coming up with an accurate valuation of the property you’re analyzing, and what you should be paying for the property in the first place .

Where To Find Free Real Estate Market Research

Like I mentioned in the beginning of this video, paid resources make market research easy, but not everyone has access to sites like this at their fingertips.

And if you don’t have access to these sites, the next step is to search for free resources online, and there are a few reliable sources that I’d recommend starting with.

Brokerage Research Reports

First on this list, and the first place I’d recommend going when looking for market data, is to search for free market research reports released by the major brokerage firms, specific to the geographic location you’re analyzing and the time period we’re in.

The big firms like CBRE, JLL, and Cushman & Wakefield have massive research arms of their companies, and generally put out quarterly, semi-annual, or annual market reports for each of the four major product types (office, retail, industrial, and multifamily).

Within these reports, you can usually find the most up-to-date information in your region on things like market rents, vacancy rates, construction pipeline reports, and net absorption. And with that information, you can then use this to make assumptions about what might happen on the specific deal you’re analyzing , and where the property compares to the market as a whole.

These reports often also include information on major lease and/or sale transactions, which can also give you more insight into what you might be able to re-lease space for at a deal you’re analyzing and what your offer price should be on a new acquisition opportunity.

The big three of CBRE, JLL, and Cushman are great places to start, but other brokerage firms like Colliers, Newmark Knight Frank, Berkadia, Avison Young, Transwestern, Berkadia, and Kidder Matthews all have research departments that put out reports regularly and are great resources to turn to.

If there’s a major market out there that hasn’t been covered by the first three firms on this list, it’s a good bet that one of these other shops will have at least high-level information on the metrics you’re looking for.

Sites Featuring Properties For Lease

These brokerage reports will give you helpful information on a market as a whole for a specific product type, and will give you a great head start for some of the macro assumptions you’ll need to make in a real estate financial model.

However, one of the biggest drivers of projected returns, especially if you’re planning to renovate apartments and raise rents at a multifamily property or re-lease a big commercial suite at an industrial, office, or retail deal, is going to be your re-leasing market rent assumptions .

Since rents can vary so widely depending on the micro-location within a submarket and the condition of the property being analyzed, this generally requires a little bit more granular data to get comfortable with.

And to get that granular data, if you’re only working with free resources, your next stop to get more information on market rents in a specific locations is going to be listing sites that feature currently available real estate for rent, and the asking rental rates for these properties, as well .

Multifamily-Focused Sites

For multifamily properties, sites like HotPads.com will allow you to search for a specific address, browse units for rent in the area, and see asking rates for each property listed on the site.

These sites will generally include the number of bedrooms and bathrooms in each unit, the square footage of each unit, and also pictures of the unit as well, which will give you a better idea of where the property you’re analyzing compares from both a size and quality perspective.

From there, you can use that information to come up with both what current market rates are for the property that you’re analyzing , and also the rents that you might be able to charge if you completed a renovation on the unit interiors and/or common areas .

And if you’re looking for additional historical rent data for your multifamily deal, not just asking rates for currently marketed space, publicly available (free) information is out there, too.

Zillow offers historical rental values broken down by zip code for free on their website. This allows you to not only see current rates in the area you’re analyzing, but also historical data that goes back as far as 2014 in most markets that are tracked.

And if you’re looking to get even more granular on historical multifamily rates, Zumper tracks historical rates by number of bedrooms for many major markets across the US, again showing data all the way back to 2014.

Commercial Real Estate-Focused Sites

If you’re looking for commercial rental rates, this information can be a little harder to come by.

LoopNet is one of the best free resources out there, and will allow you to see asking rental rates on a per square foot basis for comparable office, retail, and industrial properties in a specific area. Again, this is information you can use to compare to the quality, location, and overall desirability to tenants of the deal you’re analyzing, which is critical in making sure your underwriting assumptions are accurate.

LoopNet is by far the leader in this space, but competitors are popping up more than ever today. A quick Google search for “commercial real estate for lease” in your area will get you started with quite a few helpful data points to take a look at and add to your analysis.

Current Comparable For-Sale Property Listings

Once you’ve taken a look at these listing sites and you’ve compiled data from the big brokerage firms, there’s one more source that can be really helpful when putting together market information, and that is other marketed deals themselves.

If you’re analyzing a marketed property for sale, it’s likely that you’ll already have some market information in the package presented to you by the listing broker. But if that’s not the case, or you want to add to your existing research data, other properties for sale in the market can give you great insight into the kind of rents, vacancy numbers, and rent and vacancy changes you might expect to see on a deal you’re acquiring.

Again, the major brokerage shops like CBRE, JLL, and Cushman & Wakefield will be great sources of active listings on their websites, and third-party sites like LoopNet also have current listings that can help add to the data you’re trying to put together.

Offering Memorandums

One reason why offering memorandums tend to be so helpful is because these generally pull data directly from the paid databases we talked about in the beginning of this video .

So although you can’t always pick and choose the exact information you want to see presented in the investment package, OMs will generally have an entire “market” section dedicated to what’s going on in the immediate area, developments that are both planned and under construction, occupancy rates for the specific product type being sold, where rents are trending in the market, and many other factors that might impact the rents you can expect on your deal, the vacancy you can expect on your deal, or where both might go in the future.

Historical Financial Statements

Aside from the offering memorandum, if you’re looking for more granular operating data, historical financial statements on marketed deals can also be great ways to benchmark how your deal might perform in the future.

This could mean looking at current occupancy levels, analyzing historical expense line items to see how the current operations of your deal measures up, or anything else that would be comparable and help you make projections about what might happen on the property you’re analyzing.

The Bottom Line

As with any of these resources, the goal here is to gather actual data that can help you make projections around how the property you’re analyzing is going to perform, and what you can expect both now and in the future.

Fortunately, even if it’s harder to find, this information is generally available for free online if you look around hard enough.

And if you’re looking for more guidance with the underwriting process that ties all of this market data and allows you to analyze and value commercial properties, make sure to check out Break Into CRE Academy , which will give you instant access to our library of real estate financial modeling and analysis courses, access to our library of real estate financial models and training files, and one-on-one email-based support to help you navigate the next step in your career.

Thanks so much for reading, and good luck with your market research!

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What you need to know about researching home prices.

There are a lot of home pricing resources out there, and some are far better than others.

When it’s time to sell your house, you may be feeling a little anxious. A chapter of your life is closing. There’s a lot of money on the table. You may be thinking “Is my house priced too high?" "Too low?" "Am I leaving too much money on the table?” These are big questions.

Luckily, you have a few resources at your disposal to figure out where your house stands among the crowd: a listing agent’s expertise and guidance, plus online property sites to get insight into the market.

So take a deep breath. Then do your homework. The more you know, the more confident you’ll be when it’s time to make those big decisions. 

Turn to Local Experts — Because They Really Know Their Stuff

The good news: Local market info is freely available online, so you, the seller, can get a sense of what your house is worth.

The bad news: Local market info is freely available online, so most buyers will also have a general idea of what they think your home is worth.

When pricing your house, a listing agent has your back in a way an online property listing site just can’t. An agent:

• Has real world experience in your community. 
• Knows the nuances of your neighborhood’s micro-market. 
• Can expertly assess how your home compares to similar ones recently sold in your area.
• Can tour your property to determine, inside and out, where your house fits in the real estate landscape. 

A website will do none of the above. 

An agent will, yes, consider online market data to help you set the price of your home. But they will also rely on firsthand knowledge about your home’s unique perks (and quirks), as well as about the neighborhood, to better inform your listing price. 

He or she can also recommend ways to market your house (Instagram-able photos, blog-worthy descriptions, etc.), pro stagers who can set your home up to dazzle buyers, and inspectors and contractors who can make any needed repairs.

That being said, you’ll want to have your own sense of what your house is worth too. As invaluable as a listing agent is to your selling journey, being the seller means you’re also the final decision maker. 

So keep your laptop out. We’re going to do a little research.

Search Online Property Sites — Because They’ll Give IRL Experience Some Context

Millennials are the largest group of home buyers today, according to a  NATIONAL ASSOCIATION OF REALTORS®’ (NAR) report , and they overwhelmingly start their buying journey — where else? — online.

The internet is there for you as well — to an extent — when you’re ready to sell your home. 

Online property sites like realtor.com® can give you a sense of local real estate trends, including your city’s median listing price, median closing price, and the average price per square foot. As you search, there are a couple important things to do:

• Pay attention to houses in your area that are similar to your own in terms of size, attributes, and location. When you work with a listing agent to price your home, these houses will provide the main criteria for setting the amount. 
• Take notes about what makes your house different  from the pack. As you look at online listings, think carefully about why your house is worth more or less than similar houses in your community. The better you’re able to articulate these nuances to your listing agent, the better prepared the agent will be to list your home at an accurate and competitive price. 

Having this information can also give you confidence in the price your agent ultimately recommends — you’ll know what’s standard for the market, and how the price determined for your house lines up. If there are discrepancies, talk to your agent about how he or she arrived at their price. Unlike the internet, he or she can give you a complete picture of what your home’s price should be and why. 

Also, as you search, be aware that not all real estate listing sites are created equal. Realtor.com® aggregates listings from Multiple Listing Services (MLS) around the country, which provides the most up-to-the-minute data about home sales. (By the way, realtor.com® is the official listing site of NATIONAL ASSOCIATION OF REALTORS ® , which operates HouseLogic.com.)  Most of 'for sale' listings at realtor.com®, for example, are refreshed every 15 minutes — so what you see is likely what you get.

Zillow, on the other hand, collect its listing information from a variety of sources and may not always be as up to date as the MLS. 

The takeaway: Seller, beware. Consider your online source. Take what you’ve learned from online listings to your agent to talk about what’s really best for you and your home. 

Related Topic:  Sell a Home: Step-by-Step

Try Online Price Calculators — With Caveats

As long as you’re on the internet, you might decide to try an online home price calculator. With these calculators, property sites use sale prices near you (and overall market data) to  approximately predict your own home’s value.

You’ll find an online home price calculator at almost any property site, and they all work a little differently. Realtor.com®’s home estimator tool , for instance, factors in your home’s square footage and recent home sales in your area to calculate an approximate recommended sale price.

Plug your ZIP code or address into a site to see:

• Homes for sale in your community, which can give you a sense of the overall market
• Estimated prices of similar homes in your area, which can provide a general range of home prices in your area
• Property descriptions and photos of local homes for sale, which can give you a feel for how other homes are being marketed to buyers (and how you can do even better)

Info like this is good to know — particularly because most buyers will see similar numbers when they to online research, too — but you have to take what online home price calculators tell you with a grain of salt .

Online price calculators can be useful as a reference, but they have limitations in terms of their scope (they can’t read nuances of the market like a human can), as well as their reliability. Some, including Zillow’s Zestimate tool, which estimates market value, have been challenged by some users for inaccuracy.

Your listing agent’s knowledge and expertise are more reliable measures for determining your own home’s price — he or she knows the subtleties of your home, neighborhood, and real estate market inside and out. Before you and your agent can confer, don’t get your heart set on a sale price.

Speaking of: The sale price is one thing. Potential profit is another.

How much money you’ll pocket after selling your home depends on a number of factors, including the amount of debt you still owe on a current mortgage, property taxes, and your real estate agent’s commission. To get an idea of your potential profit margin, use a net proceeds calculator, like these from United Heritage Credit Union or Oklahoma’s Credit Union . 

Again: These are only estimates. A lot of variables are at play between the time you set a sale price and the time you close. The home will be appraised and inspected, and those results could affect your out-of-pocket costs or the sale price. And you’ll likely be negotiating the price with buyers. So use a net proceeds calculator with some care.

OK, you’ve done your research. Now it’s time to find that listing agent who’s right for you .

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Home sellers on the fence waiting for that perfect moment shouldn’t wait too long, because the…

The Freddie Mac rate for a 30-year mortgage jumped 0.09 percentage points to 6.95% this week.

Our research team releases weekly housing trends reports looking at inventory metrics like the number of…

Roughly one in six Americans falls into the ‘Sandwich Generation’, meaning they are caring for their…

The Freddie Mac rate for a 30-year mortgage dropped 0.01 percentage points to 6.86% this week.

Pending home sales fell again in May, dipping 2.1% month-over-month as mortgage rates hovered around 7%.…

New home sales fell 11.3% in May, dropping from April’s upwardly revised level to a seasonally…

The April S&P CoreLogic Case-Shiller Index showed that home price momentum slipped even as the index…

Existing-home sales eased in May, slipping 0.7% to a pace of 4.11 million and trailing the…

The Freddie Mac rate for a 30-year mortgage decreased by 0.08 percentage points to 6.87% this…

New construction activity slowed in May, with the rate of housing permits, starts and completions falling…

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How To Do Market Research For Real Estate?

Avoiding emotional involvement while purchasing a rental property investment is one of the most challenging aspects of the process. When other house buyers are queued up and ready to make an offer in a hot real estate market, it's easy to make the incorrect option.

Money is made when a property is acquired, not when it is sold, according to successful real estate investors. That's because it's a lot easier to increase the value of rental property than it is to make a profit on an overvalued home.

In this post, we'll go through how to conduct a real estate market study in order to purchase a house that makes financial sense.

Table of Contents

What Is A Real Estate Market analysis?

A real estate market study , also known as comparative market analysis, examines current market prices of properties that are similar to the one you want to purchase or sell.

If you're buying or selling a home, a real estate market study is essential since it will help you understand the current market, how much similar homes are worth, and, if it's an investment property, how much you can charge for rent.

Reports are created by real estate agents and brokers to assist sellers in setting list prices for their houses and, less commonly, to assist buyers in making competitive offers.

A real estate market study provides information to assist sellers in picking a listing price and buyers in determining if the asking price is too high, cheap, or appropriate.

How to Conduct Real Estate Market Research 

The stages required to execute a competent market research campaign in the real estate sector are listed below. You'll see that this vertical necessitates a thorough examination of numerous parts. Because they are always present in the industry, it's vital to know how to examine them.

You'll also observe that studying your target market isn't something that should be done all at once; rather, it should be done in phases.

It might be difficult to learn how to do a real estate market study on your own. You can, however, obtain an exact property price for any real estate enterprise by following our step-by-step instructions.

If you're a seller, be sure you're not overpricing your house by conducting a real estate market study. Overpricing results in expired listings and a loss of market freshness. The longer you keep your house on the market, the more money you'll lose. Pricing your house too cheap, on the other hand, will result in you missing out on possible income. To get the most accurate market price for your property, use free web tools.

To learn more, click here . 

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What is a Zestimate?

The Zestimate® home valuation model is Zillow’s estimate of a home’s market value. A Zestimate incorporates public, MLS and user-submitted data into Zillow’s proprietary formula, also taking into account home facts, location and market trends. It is not an appraisal and can’t be used in place of an appraisal.

How accurate is the Zestimate?

The nationwide median error rate for the Zestimate for on-market homes is 2.4%, while the Zestimate for off-market homes has a median error rate of 7.49%. The Zestimate’s accuracy depends on the availability of data in a home’s area. Some areas have more detailed home information available — such as square footage and number of bedrooms or bathrooms — and others do not. The more data available, the more accurate the Zestimate value will be. 

These tables break down the accuracy of Zestimates for both active listings and off-market listings.

Active listings accuracy

Last updated: April 27, 2023

Note: The Zestimate’s accuracy is computed by comparing the final sale price to the Zestimate that was published on or just prior to the sale date.

Download an Excel spreadsheet of this data .

How is the Zestimate calculated?

Zillow publishes Zestimate home valuations for 104 million homes across the country, and uses state of the art statistical and machine learning models that can examine hundreds of data points for each individual home.

To calculate a Zestimate, Zillow uses a sophisticated neural network-based model that incorporates data from county and tax assessor records and direct feeds from hundreds of multiple listing services and brokerages. The Zestimate also incorporates:

• Home characteristics including square footage, location or the number of bathrooms.
• On-market data such as listing price, description, comparable homes in the area and days on the market
• Off-market data — tax assessments, prior sales and other publicly available records
• Market trends, including seasonal changes in demand

Currently, we have data for over 110 million U.S. homes and we publish Zestimates for 104 million of them.

What changes are in the latest Zestimate?

The latest Zestimate model is our most accurate Zestimate yet. It’s based on a neural network model and uses even more historical data to produce off-market home valuations. This means the Zestimate is more responsive to market trends & seasonality that may affect a home’s market value. We also reduced overall errors and processing time in the Zestimate.

My Zestimate seems too low or too high. What gives?

The amount of data we have for your home and homes in your area directly affects the Zestimate’s accuracy, including the amount of demand in your area for homes. If the data is incorrect or incomplete, update your home facts — this may affect your Zestimate. To ensure the most accurate Zestimate, consider reporting any home updates to your local tax assessor. Unreported additions, updates and remodels aren’t reflected in the Zestimate.

Check that your tax history and price history (the sale price and date you bought your home) are accurate on Zillow. If data is missing or incorrect, let us know .

Be aware that the model that creates the Zestimate factors in changing market trends, including seasonal fluctuations in demand. So in some cases that may be the reason for a change in your Zestimate.

I just listed my home for sale. Why did my Zestimate change?

When a home goes on the market, new data can be incorporated into the Zestimate algorithm. In the simplest terms, the Zestimate for on-market homes includes listing data that provides valuable signals about the home’s eventual sale price. This data isn’t available for off-market homes.

My home is on the market. Why is the Zestimate so far off?

Properties that have been listed for a full year transition to off-market valuations because they have been listed longer than normal for that local market. This can result in a large difference between the list price and the Zestimate.

I just changed my home facts. When will my Zestimate update?

Updates to your home facts are factored into the Zestimate. However, if the updates are not significant enough to affect the home’s value (eg: paint colors), your Zestimate may not change. Zestimates for all homes update multiple times per week, but on rare occasions this schedule is interrupted by algorithmic changes or new analytical features.

How are changes to my home facts (like an additional bedroom or bathroom) valued?

The Zestimate is based on complex and proprietary algorithms that can incorporate millions of data points. The algorithms determine the approximate added value that an additional bedroom or bathroom contributes, though the amount of the change depends on many factors, including local market trends, location and other home facts.

Is the Zestimate an appraisal?

No. The Zestimate is not an appraisal and can’t be used in place of an appraisal. It is a computer-generated estimate of the value of a home today, given the available data.

We encourage buyers, sellers and homeowners to supplement the Zestimate with other research, such as visiting the home, getting a professional appraisal of the home, or requesting a comparative market analysis (CMA) from a real estate agent.

Why do I see home values for the past?

We generate historical Zestimates for most homes if we have sufficient data to do so.

Do you ever change historical Zestimates?

We occasionally recalculate historical Zestimate values along with major data upgrades or improvements to the algorithm.  These recalculations are based on a variety of considerations and, therefore, not every new algorithm release will get a corresponding update of historical values.

However, we never allow future information to influence a historical Zestimate (for example, a sale in 2019 could not influence a 2018 Zestimate). Historical Zestimates only use information known prior to the date of that Zestimate.

Does the Zestimate algorithm ever change?

Yes — Zillow’s team of researchers and engineers work every day to make the Zestimate more accurate. Since Zillow’s founding in 2006, we have deployed multiple major Zestimate algorithm updates and other incremental improvements are consistently released between major upgrades.

How often are Zestimates for homes updated?

We refresh Zestimates for all homes multiple times per week, but on rare occasions this schedule is interrupted by algorithmic changes or new analytical features.

Are foreclosure sales included in the Zestimate algorithm?

No. The Zestimate is intended to provide an estimate of the price that a home would fetch if sold for its full value, where the sale isn’t for partial ownership of the property or between family members. Our extensive analysis of foreclosure resale transactions supports the conclusion that these sales are generally made at substantial discounts compared to non-foreclosure sales. For this reason, the Zestimate does not incorporate data about these sales.

Who calculates the Zestimate? Can someone tamper with my home’s Zestimate?

The Zestimate is an automated valuation model calculated by a software process. It’s not possible to manually alter the Zestimate for a specific property.

Can the Zestimate be updated?

Yes. The Zestimate’s accuracy depends on the amount of data we have for the home. Public records can be outdated or lag behind what homeowners and real estate agents know about a property, so it’s best to update your home facts and fix any incorrect or incomplete information — this will help make your Zestimate as accurate as possible.

You can also add info about the architectural style, roof type, heat source, building amenities and more. Remember: updating home information doesn’t guarantee an increase in the value of Zestimate, but will increase the Zestimate’s accuracy.

Does Zillow delete Zestimates? Can I have my Zestimate reviewed if I believe there are errors?

We do not delete Zestimates. However, for some homes we may not have enough data to provide a home valuation that meets our standards for accuracy. In these instances, we do not publish the Zestimate until more data can be obtained. The Zestimate is designed to be a neutral estimate of the fair market value of a home, based on publicly available and user-submitted data. For this purpose, it is important that the Zestimate is based on information about all homes (e.g., beds, baths, square footage, lot size, tax assessment, prior sale price) and that the algorithm itself is consistently applied to all homes in a similar manner.

I don’t know of any homes that have sold recently in my area. How are you calculating my Zestimate?

Zestimates rely on much more than comparable sales in a given area. The home’s physical attributes, historical information and on-market data all factor into the final calculation. The more we know about homes in an area (including your home), the better the Zestimate. Our models can find neighborhoods similar to yours and use sales in those areas to extrapolate trends in your housing market. Our estimating method differs from that of a comparative market analysis completed by a real estate agent. We use data from a geographical area that is much larger than your neighborhood — up to the size of a county — to help calculate the Zestimate. Though there may not be any recent sales in your neighborhood, even a few sales in the area allow us to extrapolate trends in the local housing market.

I’m trying to sell my home and I think my Zestimate should be higher.

The Zestimate was created to give customers more information about homes and the housing market. It is intended to provide user-friendly data to promote transparent real estate markets and allow people to make more informed decisions — it should not be used to drive up the price of a home. Zestimates are designed to track the market, not drive it.

Can I use the Zestimate to get a loan?

No. The Zestimate is an automated value model and not an appraisal. Most lending professionals and institutions will only use professional appraisals when making loan-related decisions.

I have two Zestimates for my home. How do I fix this?

If you see two Zestimates for the same property, please let us know by visiting the Zillow Help Center and s e lecting Submit a request. You may see more than one Zestimate for your address if you are a homeowner with multiple parcels of land. Zillow matches the parcels on record with the county. If you officially combine parcels, the county will send us updated information.

What’s the Estimated Sale Range?

While the Zestimate is the estimated market value for an individual home, the Estimated Sale Range describes the range in which a sale price is predicted to fall, including low and high estimated values. For example, a Zestimate may be $260,503, while the Estimated Sale Range is $226,638 to $307,394. This range can vary for different homes and regions. A wider range generally indicates a more uncertain Zestimate, which might be the result of unique home factors or less data available for the region or that particular home. It’s important to consider the size of the Estimated Sale Range because it offers important context about the Zestimate’s anticipated accuracy.

How can real estate professionals work with the Zestimate?

Millions of consumers visit Zillow every month. When combined with the guidance of real estate professionals, the Zestimate can help consumers make more informed financial decisions about their homes. Real estate professionals can also help their clients claim their home on Zillow, update the home facts and account for any work they have done on the property. A home’s Zillow listing is often the first impression for prospective buyers, and accurate information helps attract interest.

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Mastering the Market: 7 Must-Have Tactics for Real Estate Agents Post-NAR Settlement

Change is challenging. by leveraging data, building relationships, and honing skills, real estate agents can turn this challenge into a significant opportunity.

The real estate world has undergone a significant transformation. The NAR settlement has disrupted the industry, forcing everyone to adapt. As the landscape shifts, REALTORS face new challenges such as:

• Eroding value: Increased transparency may lead clients to question their agents’ worth.
• Tighter margins: New rules might result in lower commissions.
• Intense competition: More agents are competing for fewer quality listings.

Here are 7 Strategies we recommend to professional agents so they can thrive in this new reality:  

Step 1: Embrace the buyer-driven market

The era of endless property searches is over. Now, creating standout buyer profiles is key. Delve deeply into clients’ desires, covering everything from neighborhood vibes to architectural preferences and lifestyle needs. Detailed profiles attract the right sellers.

Step 2: Become a data whiz

Data is a crucial asset in the post-NAR world. Use a platform that provides valuable insights into buyer and seller behaviors. Regularly analyzing these analytics helps identify popular want-listings and hot spots, guiding strategic decisions and boosting success rates.

Step 3: Build a seller network

Sellers remain essential. Building relationships with homeowners in target areas, even if they aren’t currently selling, can be advantageous. Engage with the community through events, social media, and local meetups to create valuable connections. Being able to present eager buyers to potential sellers can encourage them to enter the market.

Step 4: Sharpen negotiation skills

With buyers clearly stating their desires, buyer agents must advocate with renewed vigor. Understanding clients’ must-haves and deal-breakers enables agents to make compelling cases to sellers. Effective negotiation ensures both parties feel valued and satisfied.

Step 5: Stay on top of legal changes

Being informed about legal updates is crucial. The changes from the NAR settlement necessitate a strong grasp of new regulations and compliance requirements. Regularly keeping up with industry news, attending webinars, and pursuing continuous education in legal matters positions agents as trusted experts.

Step 6: Embrace technology

Use a platform that enhances efficiency. Utilizing its tools to automate tasks, manage leads, and maintain communication saves time and effort. Setting up alerts for new seller responses ensures nothing is missed. Efficient use of technology frees up more time for strategic planning and client engagement.

Step 7: Showcase successes

Sharing success stories from deals closed is vital. Promoting them on social media and websites attracts more clients. Real-world results build credibility. 

In this industry upheaval, Gitcha emerges as a transformative tool. Our innovative platform helps agents efficiently expand their reach and referral network by broadcasting buyers’ specific needs to a wide network, motivating potential sellers by appealing to their flexibility, and enabling agents to set and agree on compensation terms. Furthermore, Gitcha offers exclusive purchase opportunities and naturally draws in new clients, revolutionizing the real estate market, fostering a dynamic and demand driven marketplace.

Change is challenging, but this new landscape offers an exciting opportunity to lead a real estate revolution. By embracing Gitcha’s model, leveraging data, building relationships, and honing skills, real estate agents can turn this challenge into a significant opportunity. The future of real estate belongs to those who adapt and innovate. Are you ready to lead the way?

For more information, visit www.gitcha.com .

Bill V. Hang

Bill V. Hang is the Head of Business Development for Gitcha.

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