The savvy real estate buyer or seller knows that a comparative market analysis online is crucial before engaging in any dealings. Before explaining what a comparative market analysis online is, you should know that analyzing the market is vital before commencing any business. In simple terms, let’s say you want to buy a laptop. Do you just haphazardly walk into the store and pick out the laptop that appeals the most to you? No. You go online, search for the best specifications, the best manufacturer, the best prices; more importantly, you want the best bang for your buck. In pure and simple terms and on a much smaller scale, that is what a comparative market analysis online is.
What Is a Market Analysis?
In what is called a business plan, conducting a market analysis before investing in any business is key. In olden times, an investor would just open up any store/business without conducting any research. This may have worked 50 years ago. However, with today’s vicious market, SMEs are popping up all over the place and competition is fierce. Without analyzing what exactly you’re getting into, it pretty much means you’re going in blind.
So what is a market analysis exactly? In a more technical fashion, it is both a quantitative and qualitative review of the target market. The research is primarily concerned with the size of the market, the consumer, the competition and the economic status of the market.
Why Is Market Analysis Important?
What does a market analysis tell you about a market? By researching the market and reviewing the results, you get a general idea on the direction of the market. By the end you should know the ins and outs of the market you’re investing in. Below are some of the aspects that a market analysis produces.
- Target Segment
Segmenting the market into groups, whether by age, gender or social standing is the first step into getting to know who your customer is. The first thing a market analysis tells you is who your customer is. This valuable piece of info allows you to know who you will need to market your products to. By studying up on your consumer, you will be able to satisfy their needs more easily. Knowing your targeted demographic is vital and here’s why. By zeroing in on the desired demographic to target, the product can be tailored to his/her experience, thus gaining more customer satisfaction
The 2nd most important thing in analyzing the market is knowing who your competitors are. Identifying the strengths and weaknesses of both your competition and your own business is valuable information. What’s more important is identifying your business’s competitive edge. Finding out your opponent’s weakness and your own strength and formulating a strategy to have the ability to be competitive in the market is crucial when entering a new market terrain.
- Market Gap
A market gap is a consumer need that is not fulfilled by the established businesses in the market. Finding a gap in a market is akin to finding a pot of gold. A good market assessment will locate the market gap and enable the investor to fulfill it. Satisfying a missing consumer need is one of the best methods to stay competitive in the market.
Comparative Market Analysis Online
Now that the idea of market analysis is clear, we can better understand the nature of the comparative market analysis online. What is comparative market analysis? Simply, it is the evaluation of prices of similar products before engaging in any purchase or selling transactions. Comparative market analysis is primarily done in real estate. Much like the laptop example given earlier, when a prospective buyer is looking at real estate, he/she does a comparative market analysis online. How exactly does this help?
By knowing the price of similar real estate (same neighborhood, location or size), the price of the desired purchase can be estimated quite easily. The way comparative market analysis online works is by examining recently sold real estate, often referred to as comparables. After the assessment is over, the buyer gets the full picture: prices of nearby real estate sold over a period of time. This can help the buyer find a fair deal. Not only does the comparative market analysis online help prospective buyers, but it also helps home owners find the value of their currently owned real estate.
To fully understand how comparative market analysis online works, here is an example that could better help understand the parameters of the assessment.
A prospective buyer wishes to bid or send an offer on a small one bedroom apartment. The intended apartment is on the 6th floor os 1600 square foot apartment complex. The owner is asking for $120,000. Through a comparative market analysis online, the buyer finds the comparables (similar real estate recently sold under almost the same conditions). These similar apartments that were recently sold are from nearby apartment complexes. They are almost identical in size, location and conditions. The 3 comparables were sold for different prices. The first one was near a train station and was sold for $90,000. The 2nd apartment was slightly larger in size and was sold for $160,000. The last place was in the same apartment complex the buyer was considering but it was a top floor apartment. It sold for $200,000. Based on the comparative market analysis online conducted by the buyer, the price he was offered is considered fair.
Although all 3 apartments are differed in conditions, the buyer was able to estimate the price and ensure a fair deal. This was achieved by thorough comparative market analysis online.
Never Go in Blind
Accurate research and assessment is key when it comes to taking any steps in the business world. In today’s world entering a market without fully knowing its parameters is guaranteed to produce an unsuccessful business. Whether its opening a business or buying a house, thorough research is crucial in guaranteeing a smooth and successful transaction. In business, market analysis is one of the most important parts of any startup strategy. When done correctly along with a detailed business plan, the investor will be clear on the path his/her business is headed. As for comparative market analysis online, when conducted thoroughly, it guarantees the buyer a fair deal and gives the seller an estimate to help ease the buy/sell transaction.