A residential market analysis determines the current market value of a property. Information such as home type, square footage, and prices of similar homes are gathered online or from a real estate agent. Six homes of the same type and similar amenities are chosen, and their prices are used to calculate the price per square footage. This information can be used to determine the listing price or buying price of a home.
A residential market analysis helps determine the approximate and current market value of a residential property. A residential market analysis is typically conducted by a real estate agent, appraiser, home buyer, or home seller. In order to conduct a residential market analysis, you need to gather information such as home type, square footage, list and sales prices of similar homes on the market, an evaluation of the features and amenities of the homes you are comparing, and the proximity or location of residences.
Most or all of the information you need can be found online or from your real estate agent. Real estate websites, national public record sites and the multiple listing service (MLS) used by real estate professionals allow you to gather all the information you need to conduct a housing market analysis.
The first thing you want to do when conducting a residential market analysis is pick six homes. You have to choose three houses that are currently for sale on the market. The other three properties chosen should be three houses sold in the last three to six months. All six homes you choose must be of the same residence type. This means that all homes should be single family homes if this is the analysis you want to conduct. If this is a condo market analysis, make sure all six properties are condominiums.
To further narrow down your options, you should look at residences that are close to each other. In rural areas, it may be necessary to include houses further away simply because houses tend to be further apart. Finally, the footage and amenities of the properties you’re comparing should be the same or similar.
For example, you can’t conduct a true residential market analysis by comparing a 1,500-square-foot home to a 5,000-square-foot home. Once all of this information is gathered, you can use the gathered information to perform calculations to determine price per square footage and residential home prices for the area.
Take the average price of the homes you’re comparing in the area and divide it by the average square footage. This gives you the price per square footage that homes sell for in the area. If the average price of a 1,500-square-foot home is $150,000 US Dollars (USD), divide 150,000 by 1,500, which tells you the homes are selling for about $100 USD per square foot.
You can use price per square foot to calculate how much you should list a home for sale or how much you should pay for a home. For example, if you have a 1,562 square foot home, you would multiply $100 USD by 1,562 square feet to get a price of approximately $156,200 USD.
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