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How Do I Conduct a Residential Market Analysis?

Kristie Lorette
Kristie Lorette

A residential market analysis allows you to 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 a home seller. In order to conduct a residential market analysis, you need to gather information such as the type of the home, square footage, listing and sales prices of similar homes on the market, an evaluation of the features and amenities of the homes you are comparing and the vicinity or location of the residences.

The majority or all of the information you need can be found online or from your real estate agent. Real estate websites, country public record sites and the multiple listing service (MLS) that real estate professionals use allow you to glean all of the information needed to conduct a residential market analysis.

A residential market analysis may be conducted by a real estate agent.
A residential market analysis may be conducted by a real estate agent.

The first thing you want to do when conducting a residential market analysis is to choose six homes. You need to choose three homes that are currently up for sale on the market. The other three properties you choose should be three homes that have sold in the last three to six months. All six of the houses you choose should be the same type of residence. This means that all of the homes should be single-family homes if this is the analysis you want to conduct. If it is a condominium market analysis, then make sure that all six of the properties are condos.

Survey cards might be mailed out to customers as part of a relationship marketing strategy.
Survey cards might be mailed out to customers as part of a relationship marketing strategy.

To narrow down the options even further, you should be looking at residences that are close to each other. In rural areas, you may have to include homes that are further away simply because homes tend to be more spread apart. Finally, the square footage and amenities of the properties you are comparing should be the same or similar.

For example, you cannot conduct a true residential market analysis comparing a 1,500 square foot home to a 5,000 square foot home. Once you have all of this information together, you can use the information you have gathered to run the calculations to determine the price per square footage and residential housing prices for the area.

Much of the information you need to conduct a residential market analysis can be found online.
Much of the information you need to conduct a residential market analysis can be found online.

Take the average price of the homes you are comparing in the area and divide it by the average square footage. This provides you with the price per square footage that homes are selling 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 that homes are selling for about $100 USD per square foot.

You can use the 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 home that 1,562 square feet, then you would multiply $100 USD by 1,562 square feet to obtain a price of approximately $156,200 USD.

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    • A residential market analysis may be conducted by a real estate agent.
      By: highwaystarz
      A residential market analysis may be conducted by a real estate agent.
    • Survey cards might be mailed out to customers as part of a relationship marketing strategy.
      By: petert2
      Survey cards might be mailed out to customers as part of a relationship marketing strategy.
    • Much of the information you need to conduct a residential market analysis can be found online.
      By: dbvirago
      Much of the information you need to conduct a residential market analysis can be found online.