The Important Role of Market Research in the Real Estate Market
In today’s rapidly globalising world, any number of tiny advantages in any market can easily swing an investment from detrimental to wildly profitable, from a loser to a huge winner. The same is true for the property market, whether buying, managing, or selling property. The market is simply so vast and so attuned to changes that individual investors and managers are more and more likely to find themselves lost in the greater marketplace. Individuals simply do not have the time, energy, and resources to keep fully abreast of any and all changes and vacillations in the property market. Sure, some may be able to stay afloat through disciplined strategies, patient investments, and a whole lot of luck, but with every passing day it gets more difficult for these investors to remain competitive.
The sheer volume of knowledge that is necessary to maintain a competitive edge is staggering. Keeping up with pricing changes, market movements, and what the competition is up to is a full time job in itself. Adding the market research necessary to compete on top of the actual work of managing, selling, and purchasing properties can make many individual investors feel put out and eventually knock them out of the market. This is where buyer’s agencies and property management firms come into play. They maintain the manpower and resources to stay on top of market movements and changes, and allow individual investors to focus on their true strengths: buying properties. It’s simply too much to ask of a one-man investment firm to perform the market research and then translate their discoveries into sales strategies and effective sales.
Tenants’ willingness to pay is a fickle and rapidly changing phenomenon. Factors as simple as changing weather patterns can have large influences on what tenants perceive as a fair price for a property, and expecting investors to track every single variable at play is simply unrealistic. Again, larger property firms have entire teams dedicated to exactly this type of market research, and are therefore able to fill in the knowledge gaps that individual property investors will inevitably have, no matter how many hours they work or how attuned to the market they are. This sort of market research will not only allow a more effective in the moment pricing strategy, but will also allow investors to understand larger, sweeping market changes that may affect the future value of a property as well. For example, say more people move to a given city in the summer than they do in the winter. If a property manager is looking for a new tenant in the early spring, they may find it beneficial to wait until the swell of people move into their city and drive the property values up before looking for a new tenant. Again, these types of information may not be readily available to individual investors, while buyer’s agencies have a multi-faceted approach dedicated to deal with changes market factors just like this one.
Another advantage of a buyer’s agency is the ability to minimise risk. As any investor will tell you, diversifying a portfolio is of the utmost importance when attempting to not only maximise potential profit, but also minimise potential losses. Buyer’s Agencies firms have teams dedicated to pinpointing the best properties to purchase and sell when investors attempt to diversify their portfolios, and with the massive resources and ability to understand the real estate market, we can do a much better job than individual investors at minimising risk and therefore mitigating potential losses incurred when buying properties on the real estate market.