How to get familiar with a real estate market
Most times, people think being a real estate investor requires you to be a landlord who deals with tenants, fixing and maintaining the property they are in, and other people imagine being a real estate investor equates to you having enough money to fund huge developments personally. Both of these are correct, depending on what type of real estate investor you want to be or you are.
“Real Estate is an imperishable asset, ever-increasing in value. It is the most solid security that human ingenuity has devised. It is the basis of all security and about the only indestructible security.” Russell Sage, American Financier and politician.
In order to enjoy the security and wealth in real estate investment, you need to know and understand everything there is to know about the real estate market. In this article, you will be learning how to become more familiar with the real estate market.
What type of investor are you, active or passive?
One of the first steps to know as you become familiar with the real estate market is to figure out the type of investor you want to be. Will you be hands-on, an active participant, and get to know all the know-how’s, or will you be passive, not having to worry about the details, just supplying money when need be and make your returns?
Being an active participant requires you to be hands-on with everything that concerns your investment. Being an active participant is a huge role to play, as an active participant, you might be the one who did the plumbing in a house you’re trying to flip or rent or the one who set up the designers to get the work done.
As long as you’re taking time out of your day to make sure the job gets done, you are as active as anyone in the scenes of investors who actively participate. The more involved you are, the higher returns you are likely to receive because you’re in the mix and in the know-how of what you are investing in, and the more active you are, the more time it will take out of your day. So when deciding on being an active investor, take note that this will consume your time because time requirement is essential.
On the other hand, being passive in participating as an investor means you hire people who do much of the day to day work, this is more suitable for people who are already very busy daily, or do not want to worry themselves with the responsibilities an active participant will usually deal with.
By simply hiring a property management company to take care of all details for you, or not having to worry about maintenance or issues that might arise except monetary of course. This is great, but keep in mind that as a passive participant, you give up some of your earnings like management or maintenance fees to people hired in exchange for your time and unavailability.
Once you figure out what kind of investor you will be, you can go on to understanding real estate.
Real estate market analysis
According to SFGATE’s home guide; “A real estate agent prepares a market analysis using data from the multiple listing service. A real estate professional typically prepares a comparative market analysis (CMA) before a client purchases or sells a home. The report outlines the estimated value of a property based on its features and the conditions in the area’s housing market. Buyers and sellers can use the report to gauge whether a home’s sale price is reasonable.”
So in using more straightforward terms, it is an analysis of the current market values, comparable to properties you are looking to buy or sell. This is helpful in determining the market value of your property or property you are looking to invest in. If you know and understand the market analysis, you’re less likely to make any mistakes because you went as far as to analyze, research, and weigh the best options.
The real estate market analysis is different compared to an appraised value (an evaluation of a property’s value based on a given point in time) and is determined by an expert appraiser. A comparable market analysis is looking at a property subjectively and providing the seller information on the values of similar properties in the area.
Though there are many factors to take into consideration when performing a real estate market analysis, it is manageable with a well-structured approach. Doing a real estate market analysis, whether you are buying or selling property, helps you understand the current housing market, from knowing how much properties similar to yours are worth, or how much to charge for rent.
Information gotten through real estate market analysis or helps the seller/buyer choose a listing price. By comparing similar properties on the market, you learn the accurate price for your investment.
Here are a few things to take note of when looking at the market analysis:
- Comprehensive report
For a more detailed explanation on each listed above, you can check out: (https://homeguides.sfgate.com/real-estate-market-analysis-defined-7117.html )
How to be a local market expert
In order to understand and be familiar with the real estate markets, there are some necessary measures to take that will put you on the right track of knowing, they are as follows:
Give yourself the tour:
You have to get acquainted with your local real estate market on your own without anyone. Take time to visit new estates under construction within or on the outskirts of town. Know the shortcuts, walking routes to the shops and facilities, how long it takes to reach the nearest bus stop, the proximity, and every other valuable information about the area. This adds credibility and will allow clients to value not just the information, but will also help them envision their future at the home you’re showing.
Study the local real-estate market:
Read local newspapers to keep up to date on any developments that may have an effect on house prices. Values fluctuate, so remember to keep a note of former clients who are renovating their homes or adding changes. A well-informed agent is a well-prepared agent.
Connect with local businesses:
Making connections with local businesses is rewarding and beneficial over time. Having this working relationship could also lead to unsolicited recommendations for your services.
Get involved in the community:
Establishing yourself in the local community of your local market makes you become a well-known face around town, makes you trusted, and also opens you up to becoming more aware of trends and shifts in the housing market through word of mouth.
Check this link out for more on becoming a local market expert: (https://www.engelvoelkers.com/en/blog/company/job-career/become-local-real-estate-market-expert/ )
Things to know to get into real estate marketing
Real estate investor and realtor Donald stepper gave some interesting advice to novice real estate investors in the business where he explained the things to take note of when getting into the business:
- Buy the worst house in the best neighborhood.
- When renovating a house, know the difference in renovating for rental or for a buyer.
- The end result of any renovation should keep the customers in mind.
- Choose the agent, not the brokerage
- Always get a home inspection even after new construction.
- When buying, always buy title insurance for yourself. Protect yourself.
- Understand that everything is negotiable.
- If you’re buying, always be represented by your own agent.
- Know that real estate agents don’t offer legal advice because they aren’t permitted to unless they are lawyers.
- When buying, understand what is important and what isn’t.
For more details on this, check this link out (https://www.quora.com/How-should-I-begin-to-learn-real-estate )
Steps for real estate marketing analysis
Step 1- Do A Property Analysis
The first step in your real estate market analysis is to perform an analysis of the property.
- Know the area and neighborhood: just like I mentioned above, explore the neighborhood in which the property is located to assess the quality. This will help you determine your price list and also lets you compare with similar properties.
- Size or square footage: know the size of the property you’re either buying or selling.
- Lot size.
- Take note of bedrooms and bathrooms: this is important when determining the value of a home. The higher the number of bathrooms and bedrooms, the more value on the property.
- Other rooms: homes with more bedrooms generally mean a higher price; know if your property has rooms that can be used as an office or den, but be sure to check out local building codes to ensure these other rooms can legally be classified as bedrooms.
- The number of floors. Take note of the number of floors on your property.
- Construction age: history and originality of the property play a great role in adding value.
- Amenities and features: Several amenities and features that may increase the property’s value include a fireplace, deck, garden, swimming pool, balcony, and if the property is located in a gated community with a clubhouse or access to tennis courts. All of these increase the value of the home.
- Proximity to local amenities: know if the property is near a busy road, if it has quick freeway access if it’s close to stores, public transportation, parks, schools, etc. But also looks at the other side of the coin, where you take note of the property’s close proximity to undesirable sites like a garbage dump or industrial buildings.
- Recent or notable improvements. This can also add value to your property.
Step 2- Be Sure to Assess the Original Listing Price
After property analysis, lookup for the original listing of the property, if possible. It gives you an idea of the general condition of the home, look through photos and descriptions for any upgrades, remodels or potential issues, let the builder or developer of the property be listed so you can determine if it was custom built or not. This gives you an overall idea of what to work with and how to go about working with the property at hand.
Step 3- Check and Know Property Value Estimates
Get the estimated market value of the home from online sites. Market value estimates may not always be accurate, especially when changes have been made to the home. But checking and knowing provides a good startup number to go with as you continue your real estate market analysis.
Step 4- Check Out Properties That Are Comparable To Yours
Take time to search for properties that are comparable to yours. The following are guidelines that can be used in comparing property:
- Identify Recently Sold Properties in the Area: When you are searching for comparable properties, look up sold listings online to see how much similar homes are sold in the area. Also, searching for homes sold in the last three months, give you accurate value as market trends fluctuate.
- Search for Current Listings of Comparable Homes: Lookup current listings of comparable homes within a one to three-mile radius and choose three homes, at minimum, that are comparable to yours. The value of unsold homes is impacted by real estate trends; current listings give you a good idea of what your competition is like.
- Consider Pending Listings of Comparable Homes: looking at these listings will give you real-time insight into how the market is doing.
- Look up Expired Listings of Comparable Homes: this gives you valuable information for your market analysis because usually properties that have expired were priced too high.
Step 5 – Determine a Price Range
When determining a price range for your property, pick one property from the three to five comps you found, that is worth more than yours. This number will be your ceiling value – or at the top of your price range. Then pick a property that is worth less than yours and make it your floor price – or the bottom of your price range.
Step 6- Assess the Home in Person
assess the property in person, take note of factors that will add value, such as: overall condition, any additions or upgrades, amenities, features, necessary upgrades or repairs, as well as the exterior and landscaping.
Step 7- Decide the Market Value
After all your research, you should have a price range for your property worth. Take into account everything you observed and researched and then decide where your property falls within the established price range. This number is the market value of your home.
For more information on this: (https://www.realwealthnetwork.com/learn/how-to-do-a-real-estate-market-analysis/)
Skills You Need To Become A Real Estate Agent
Anthony Hitt once said:
“To be successful in real estate, you must always and consistently put your clients’ best interests first. When you do, your personal needs will be realized beyond your greatest expectations.”
The most outstanding real estate agents in the business have a flair for looking forward to what their clients need and meeting those needs with the right piece of real estate. As a real estate agent, there are certain skills you can acquire, or you might require to help you to perform to your maximum potential, some agents stand out more than others do because they have taken time out to fully invest and improve their skills to help their clients get their dream homes and this is why some agents are great at closing deals that their clients benefit from. What are these skills you might ask? They’re as follows:
- Having local knowledge
- Good communication skills
- Integrity (Honesty and good character)
- Familiarity with rules and regulations
- Passion for the job
There are, of course, other skills you require, but these are essential for you to become a real estate agent.
Having local knowledge
This cannot be overemphasized; having local knowledge of the area is an essential and almost an automatic win for you when your clients ask any question, and you have the right answers. Having this skill gives you an edge in terms of knowing and understanding all necessary rules and regulations in different areas and communities, as well as knowing other locations that present good real estate opportunities for your clients.
A clear understanding of neighborhoods and home values in all relevant areas over time by gaining local knowledge takes time to develop, but it will help you build a successful career.
Good communication skills
Paul J. Meyer expressed the importance of communication when he said: “Communication – the human connection – is the key to personal and career success.” Being a real estate agent requires great communication skills, not only to be heard but to listen to their client’s interests.
As an agent, good communication skills help in discussing all matters before a contract is drafted and in negotiating all aspects of a deal so that both parties benefit. Being able to communicate effectively between parties is very important as a real estate agent.
Honesty and good character are key, have a good reputation for these two qualities. If you want to become an agent who is known for putting in their best and giving adequate results, you must have integrity. Being the opposite tarnishes your career fast and for good.
Both sellers and buyers look for the best returns on their deals and are likely to ask for referrals before they decide to hire an agent. A good reputation matters, especially when your client-base can provide good testimonies of recent successful deals.
Hard work pays, the work you put in is what you get out. Having a hardworking attitude makes an agent stand out. Selling and buying homes is not a one-day job, although it may be in certain cases but it takes a lot of time and effort most times getting both parties to agree to terms before they sign a contract.
A good real estate agent should never give up and put all their effort into buying and selling properties. The job deals with making important decisions between both parties, so no one will not want to hire an agent who is lazy or does not take their job seriously.
Familiarity with rules and regulations
A real estate agent should understand how rules and regulations apply to real estate in a particular region. Being familiar with all laws relating to a property so that they do not give information to clients, or mislead them is important for a real estate agent.
The agent guides clients through all the necessary paperwork and legal technicalities related to a sale. Most clients do not have knowledge on any of this, so your job as an agent is to enlighten them and give them all the information they need to know and abide by.
Being persistent in following up on clients is one important aspect of being a real estate agent. Failing to take every lead, you get makes you less likely to become a top performer. Following up, every lead is crucial in achieving success.
Following up on leads may require automation or a system that keeps track of beneficial leads, take advantage of the recent technology, and use it to improve your business. Do not wait for clients to call you; keep a check on all appointments, meetings, and showings. Also, be flexible and adjust your schedule if the client requests.
Passion for the job
Steve Jobs said: “Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do.”
To be a successful real estate agent, you have to enjoy what you do for a living. If you find yourself hating more than loving what you do, you may not be in the right career choice.
You must have a passion for serving people by showing them the best properties within their budget and making sure that you still offer them the best options that come with it. Estate agencies require that you have respect for diversity so that people from all cultures and neighborhoods are accommodated, satisfied, and happy. You can’t be passionate if you are always impatient, frustrated, or bored with your job because you begin to project this on your clients, and that’s bad for you and your business.
Be enthusiastic about what you do, be presentable, and take care of your looks. Let your actions show that you are in the business to help your clients accomplish beneficial property investments, as well as build their own successful real estate career.
Like it was said earlier, these are not the only skills required, but they play key roles in your business. As you look into being part of the real estate market, these will help guide and shape you into the best you can be. To get more information on this, you can click on the link below:
The Benefits of Understanding your Real Estate Market
There are benefits to understanding the real estate market. Some of these benefits, according to real estate express, are:
- Use the data to evaluate your performance. With the data you get from your market analysis, you can easily know how many agents you are in competition with, know your competitor’s experience levels, and how you rank against these agents in your brokerage and in your area. It also gives insight that will help you to set financial goals and other objectives.
- Fully understand market conditions. You can understand the market and know what your clients want and expect from the market, know what is propelling or slowing the market, and if you are dealing with a buyers’ or sellers’ market. Understanding these conditions allows you to keep in check both you and your clients’ expectations as they try to buy or sell a property.
- Offer clients better advice. Understanding your real estate market allows you to establish and evaluate the price of a listed property to help your seller and buyer clients make the right decisions. Because you have knowledge from analysis, it puts you in a good position to offer their best advice to your clients.
- Position your clients’ properties against competing for real estate. The results from market analysis help you determine what buyers should offer in order to get a fair deal or how sellers should price a property. It gives you insight on an old average listing, percentage of listings actually sold, listing prices compared to sale prices, most active segments of the local market, and the features of the properties that are currently listed or have recently sold.
- Create promotional opportunities. You can build your credibility and land new clients by sharing your knowledge during phone calls or in-person conversations with prospects, and when you connect with past clients or ask for referrals. You can also share your knowledge via blog, social media, newsletter, emails, or the media to build your reputation as a thought leader.
To get familiar with the real estate market as an investor, you have to decide the type of real estate investor to be, you can either be an active or passive participant. As an active participant, you should prepare to put yourself into the process, putting in your time, energy, being hands-on about everything that involves your property but choosing the role of a passive participant means you will be investing your cash in hiring a managerial team who will all the work or contribute to a real estate company having little to do with the responsibilities and still getting returns.
As a real estate agent, get familiar with the market through marketing analysis, this is one of the first and most important things to do. The marketing analysis gives you insight and assists you in understanding the property you are buying or selling; it helps you compare between property prices and availability, it provides comprehensive feedback from properties in the area, details on all variables in the property and also warns/prepares you for whatever high and low the market may face in the future.
To be an expert in your field, we talked about a few things that put you in the forefront to succeed as an agent, knowing your surroundings; get to know anything and everything about the local area, get familiar with the roads, facilities and even the people in the area.
Paying close attention to the local real estate market is also essential, keeping up to date by reading the news, watching the media, and keeping up with clients. Also, connecting with local businesses and participating with the local community gives you credibility, referrals, familiarity, reliability and gives you firsthand in-person knowledge about what is going on in the community by association from the locals.
For beginners, we provided information about things to know when getting into real estate, preparing you to be ready for what is to come.
We gave the steps involved in real estate market analysis which are:
- Do a property analysis.
- Be sure to Assess the Original Listing Price.
- Check and Know Property Value Estimates
- Check Out Properties That Are Comparable To Yours
- Determine a Price Range
- Assess the Home in Person
- Decide the Market Value
As an agent, you require certain skills that will help you stand out and grow to be successful, these skills will help you meet your clients’ needs, gives you credibility and make you better at your job. These skills include having local knowledge, excellent communication skills, being honest and of good character, hardworking and ethical, familiarity with rules and regulations, being persistent, and having a passion for the job.
There is a lot to benefit from being familiar with the real estate market, make efforts to know and understand and enjoy the rewards in the long run throughout your career.