How to Create a Real Estate Market Analysis
If you are planning on selling your home, having a current real estate market analysis is vital. If you will be working with a real estate agent in the sale of the home, he or she will provide you with this analysis, free of charge. Even if it is just curiosity that spurs you to learn the value of your home, it is easy to perform your own analysis of the current real estate market in your area. Keep in mind that current market value, for both appraisals and sales, is based on what a willing buyer will pay for a home, which is reflected in the recent sales prices of homes. The current list price of homes on the market provides information you will use as indicative of any market change, but it is not what the value of your home will be based upon.
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Instructions
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Go to a real estate website, such as Zillow.com or Trulia.com.
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Do a search for homes that have recently sold in your area. Try to keep the search to within one mile of your home. If that isn't possible, get as close as you can to your home. If, on the other hand, there are a lot of sold homes, pick out five that are close in age and size to your home. You will need at least three sold homes, but five is ideal. You are looking for homes that have sold no further back than six months. Either save these homes within the website's save feature or copy and paste the information into your own word processing software.
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Perform the same type of search, this time for homes that are currently listed.
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Compare the sold homes to yours. First, compare the age of the homes. If they are older than your home, they will generally be worth slightly less than your home, and if they're newer, they will be worth more. Of course, there are exceptions to these rules. If an older home has had substantial remodeling and updating done, it could very well be worth more than your home. You will need to read the description of the homes to find out how they may differ from yours.
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Compare the size of the sold homes to yours. Again, smaller will generally mean that the house is worth less than yours, and larger sized homes will generally be worth more, taking into account the improvements, if any, that have been done to the homes.
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Compare the location of the sold homes to your home's location. If one home is on a busy street or backs up to a busy street and the other doesn't, the quiet home will generally have a higher value. The home with a view will bring more money than one without a view. Make notes next to the comparable homes of anything having to do with their locations that has affected their value.
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Calculate a rough estimate of the value of your home by comparing it to comparable houses. By now you should see how your home fits in on the price scale, and you can adjust the value of your home up or down, according to its age, size, condition, and location.
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Compare the value of your home to the asking price for homes in your area that are currently on the market. Keep in mind that list prices are considered "Fantasy Land" in the real estate business. These prices merely reflect what a seller is hoping to get for the home, not the home's actual value. If there are homes, similar to yours, that have substantially higher or lower asking prices, you will need to dig a little deeper to find out why. Either the market has changed drastically since the comparable homes were sold, or you have made an error in determining the value of your home. Sometimes it will help to go take a look at the homes that are currently on the market and see how they stack up to yours. Knowing how long they have been on the market is helpful information as well. Generally, a home that sits on the market for more than 45 to 60 days (taking into consideration the current market) is overpriced.
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Tips & Warnings
If home prices seem to have dropped significantly, that may be due to an oversupply of homes available on the market.
Resist the temptation to overprice your home. Unless the current market heavily favors sellers, the home will generally not sell if it's overpriced. You will be forced to reduce the price, and you will lose the valuable "honeymoon" period when a home is fresh on the market.
