What Does a Real Estate Analyst Do?

Terry Masters

A real estate analyst is employed on the financing and investment sides of real estate transactions. Banks, investment companies and other entities that provide financing for property purchases and hold real estate portfolios for sale or investment generally hire analysts in their finance departments to monitor the market, check appraisal valuations and analyze portfolio performance. The person in this position typically serves as a financing department liaison to the company's acquisitions and development department and produces financial reports for management.

The primary duties of a real estate analyst are to assess risk and analyze profit margins of real estate investments.
The primary duties of a real estate analyst are to assess risk and analyze profit margins of real estate investments.

Financial analysis is a significant part of real estate financing and investment. A real estate analyst typically holds a bachelor's degree in finance or math with additional coursework in real estate investment. Graduates can be hired by companies that primarily provide property financing or ones that hold real estate for investment purposes. In either case, a real estate analyst is primarily concerned with establishing correct valuations based on his professional assessment of the local and national market.

Real estate analysts spend much of their time collecting and analyzing financial information.
Real estate analysts spend much of their time collecting and analyzing financial information.

Real estate is typically a long-term investment. Establishing the value of property can be difficult because of the length of time between sale points and the fact that no two pieces of property are exactly the same. The only definitive way to establish the value of real estate is to sell it. All other valuations are simply estimates based on market conditions and comparisons.

Companies that provide financing will ordinarily use a real estate analyst to check the validity of appraisals. An independent real estate appraiser uses his professional judgment to determine the market value of property. Lenders rely on that judgment to decide the maximum loan amount for a mortgage, in case the lender has to repossess the property and resell it to recoup the loan. It is the job of the real estate analyst to provide quality control for the appraisal process to make sure that the appraiser conducts his work according to company standards. A poorly conducted appraisal can result in the company loaning more money than the property is ultimately worth.

On the investment side, a real estate analyst monitors the value of a company's property investment portfolio. He keeps track of local and national market indicators and economic and demographic trends, so portfolio managers have the information they need to make decisions regarding the future profitability of individual property holdings. The analyst typically provides recommendations on new acquisitions and uses special software to construct financial projections. He also estimates the current value of the portfolio, based on market conditions.

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