“DIYs” For the Win
“Do it yourself” projects have been on the rise since the day humans found out they have two working hands and a functional brain. You can “do it yourself” in almost everything, including the real estate world.
Specifically, you can do your own comparative market analysis, and Mashvisor is here to help.
Here, we’re going to walk you through the steps of completing an effective comparative market analysis (CMA). We might even include how to create an actual comparative market analysis in a clear and concise way (hint, hint.)
To learn more about what makes for an effective comparative market analysis, click here.
And now, the “how to” guide of performing a comparative market analysis.
Cooking Up a Comparative Market Analysis
We want to talk you through the “ingredients” you’re going to need to cook up a great comparative market analysis. As a real estate investor, you want to make sure you have enough of every single ingredient.
That is why we’re going to be your cookbook for a little bit. And now, for the recipe!
Real Estate Comps, Real Estate Comps, Real estate Comps!
That is all the recipe consists of: real estate comps! Real estate comps are short for real estate comparables. When you hear the word “comparative market analysis,” you know there is some type of comparing going on. Well, here is the comparing portion of the deal!
Real estate comparables are an aspect used in property valuation. They describe the rental properties in the area that are similar to the one you are interested in. They usually have similar features, like the number of bedrooms, bathrooms, square footage, and sale price. This way, you get an idea of the value of your investment property itself.
Oh Real Estate Comps, Where Are You?
To compare other listings with your own, you have to find real estate comps to begin with! So how do you find comparables? Here are the three main ways we suggest you find them!
On the Search for Real Estate Comps for A Comparative Market Analysis- Home Appraisals
This is the fastest way to getting your property valuation! Simple, a real estate appraiser is a professional in all things “comparable” in the real estate market. Choosing to hire an appraiser means getting an accurate property valuation. A plus side to hiring a professional is knowing they are trusted.
Appraisers’ statements are official and trusted by mortgage lenders. We both know how important those mortgage lenders can be in the real estate business; it can even be counted as a necessity! Trusted by lenders means it would be easier to get a hold of loans to finance your real estate investment property.
The small cost of hiring an appraiser will be well worth it. You are paying for professional insights from an expert that knows their real estate stuff! Fair trade if you ask us.
Learn more about how Mashvisor can help you find real estate comps and “bake” an effective comparative market analysis here!
On the Look Out for Comps for Our Comparative Market Analysis- Property Listings
Property listings are another great way to find real estate comps. We know this will need a bit more time and effort to find suitable comparables, but it works! You want to check out the inside outs of the real estate properties in the area.
First, look out for the current listings. Get an idea of the selling price of investment properties in the area you are in. These properties are the freshest of the bunch and can help you get an idea of a starting point for price.
Second, look out for the pending property listings. These would be the homes that have got themselves a purchase contract in the making but have yet to be sold. This is probably because of certain conditions, but they are just as useful as any other property listing.
Pending listings can give you an idea of what is an acceptable purchase price, as another buyer was willing to make an offer for a property with the price of the pending listing you found.
The property listings of recently sold properties are significant to consider. “Recent” usually means within a span of 6 months. Sold properties are the ideal indicators of market trends going on. You always want to be on the lookout for those market trends, as they tell you a good amount about the U.S. real estate market you are a part of.
Lastly, take a look at the expired property listings. These are ideal real estate comps as they reveal properties that were too high up there in price. These poor properties couldn’t last in the U.S. housing markets they were a part of, so they died out. This can give you an idea of just how much is “too much.”
What’s Cooking, Good Looking?
There you have it! All the ingredients to cook yourself up a comparative market analysis. A comparative market analysis is one of those real estate investment tools you can’t pass up on. Comparing and contrasting different real estate investment properties will bring you one step closer to finding the ideal rental property.
It is important to take a look at what’s out there, and a comparative market analysis does just that. So keep your eyes open, your real estate comps similar, and your purchase price ideal. Oh, and don’t forget to save us a slice of that comparative market analysis cake!