Many people who are going to buy or sell a home often times hear their realtor refer to a thing called comps. Comps, also known as comparative market analysis (CMA), are an important tool when going into a real estate transaction. They basically allow you to estimate the fair market value of a home based on a number of different criteria. It is imperative that your real estate agent provide you this information in order for you to properly negotiate a contract.
As a buyer, a CMA can give you a general view of the market conditions for the particular neighborhood in which you want to purchase a home. It allows you to know how big of a house you can afford as well as what upgrades you may be able to attain in that area. Knowing the fair market value will allow you to fine tune your decision when going to make your offer. This is especially useful if time is of a concern. If you need to get into a home sooner rather than later, an accurate CMA will allow you to make a bid on a home that will beat out other offers. If you are in no particular rush to get into a house, you can set your offers at 5-10% below fair market value and try to get yourself a good deal.
When going to sell your home, an accurate CMA is a must. Often times a realtor is hesitant to provide and accurate CMA because it may be below what the seller expects the home to sell for. In this case, you can run into a problem because the house will be overpriced and will attract few, if any, buyers. The market decides fair market value and you can use an accurate comp to adjust the selling price based on your time constraints. If you need to sell your home quickly, you can set your selling price right at market value and if you don't, you can set it at a suitable price above market value and wait to see what happens.
There are several factors that go into a CMA, and the more detailed you get, the more precise you can be on the home's fair market value. The most general way of figuring a CMA is to compare similar homes of equal square footage, in the same neighborhood, that have sold in the last six months. To get a more detailed picture you would look at things like upgrades, lot size, and whether the home backs up to a busy street. If you are a seller, don't be afraid to look at the competition. Have your realtor take you to see other similar homes in your neighborhood because it can sometimes be a good dose of reality.
There are many important things to know when going to buy or sell a home and a CMA is one of them. An accurate comp will help a buyer come up with a suitable offer when the right time comes to buy a home. It will also help a seller decide how much time they are willing to have their house on the market and set the sales price accordingly. When choosing a good real estate agent, make sure that they mention CMA's because you will know what they are talking about and how accurate comps are important to you.
Market Analysis In India
A successful commercial or residential development begins with a comprehensive market analysis. The results obtained from this research help an investor or developer to plan out his/her what to build and when. Significant decisions in the real estate industry are made with the help of market analysis; it helps executives decide on important aspects of the business which include promotional and marketing efforts as well.
Market analysis is a science that entails systematic and procedural gathering and analysis of information obtained about three key factors inherent in determining the likely success of any real estate development ? customers, competitors and the market. Every industry that exists in the market needs to perform market analysis to remain successful in the market and to grow. Real estate investors and developers rely on market research and analysis to help them answer certain basic questions:
?What are the real estate market trends?
?What are the latest developments in the real estate market?
?Who are the competing investors and developers?
?Who are the upcoming competitors?
?What are consumer reactions to the real estate trends?
?What are the consumer demands?
?What should be initiated to meet consumer demands?
?What are consumer opinions about different competitors?
Market analysis provides answers to these questions and many more. This information is vital and indispensable for any business to continue and to grow including real estate. Careful research of the three forces at play provides statistics and metrics to decision-makers on the basis of which a business? future growth is relied upon. Review of market analysis affords one the ability to confidently assess the needs of customers, their perceptions, their attitudes, their demands, reliable sales forecasts etc. and thus decisions and plans can be formulated accordingly.
A real estate investor who is reluctant to spend the necessary time and money for market research can be making a big mistake. Today's market is so dynamic that it is important to measure and to predict all possible scenarios. Of course this is not an exact science as there are too many factors at play. However, an investor should make every effort to conduct a thorough a market analysis to make sure he/she is developing to meet market needs and avoid incurring potentially huge costs, or worse, a complete failure of the development.
Investors and developers in the real estate industry have to recognize the value of market analysis prior to any buying or building commitments. Market analysis provides reliable data that can help investors and developers play safe; with the help of this information, they can maximize their returns. Opportunities in real estate acquisitions and land developments or remodels can be pursued with confidence available only in the presence of such data. The results can be used to one's advantage by performing due diligence and minimizing risk.
Market analysis condenses information and confirms mere thoughts and predictions by demonstrating proof and factual data. Different regions and different populations have different needs and demands; thus, market analysis helps to identify these distinct demands that vary from region to region. What styles and developments may be popular in one area may not at all be appreciated by the local populace of another area. All these needs and preferences can be confirmed by conducting market research.
An important aspect that shapes market analysis is the demographic attributes of an area. Demographic analysis is absolutely imperative to establish the ?highest and best use? of a real estate development. Demographics include factors such as age, gender, race, income, education, status and the like. These factors are primary players that determine an individual's interests and demands. Thus, they help a market researcher to derive the demands of an area by understanding the thinking processes of the people residing there.
Once the value and worth of market analysis is comprehended, an investor or developer can proceed by approaching a professional planner or development consultant who can further guide on the steps involved in this process.
Developers should aim their specific market analysis to determine supply and demand. If sufficient demand is observed, a developer should then approach an engineering or architectural firm that can draw plans and devise designs. After these steps have been taken, an investor will be more confident and inclined to proceed with the development knowing that the project has passed the biggest test of time ? market analysis. This is because he/she has viewed data and research information that highlights the relevance, demand and potential profitability of the project.
The striking difference between a real estate project that flourishes and one that perishes is market analysis which, in turn, helps investors and developers make informed decisions. The power of market research is such that it can bring development firms, planning firms and government agencies together in the creation of lucrative project.
Researchers and developers realize the potential of the information they can provide. Market analysis is becoming increasingly popular and today most successful developers and investors demand a comprehensive market analysis prior to taking any big steps. Soon, it will become the norm to analyze the market forces; its increasing popularity has enticed many corporations, businesses and individuals to get involved in it. As a result, investors and developers have numerous options to choose from for their purposes.
Investors and developers should not underestimate the limitless potential of market analysis. What a good and comprehensive market analysis can provide is literally unattainable and out of bounds for any other channel. Consequently, to enjoy the maximum benefits that a real estate developmental project can provide, market analysis prior to buying or building is the way to go.
Both Michael A. Stazko & Tony Seruga, Yolanda Seruga And Yolanda Bishop are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Michael A. Stazko has sinced written about articles on various topics from Recipes, Real Estate and Mortgage. Michael A Stazko is a Lewisville TX real estate agent and founder of websites that provide information on Arlington TX homes. Michael A. Stazko's top article generates over 1600 views. Bookmark Michael A. Stazko to your Favourites.
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