How To Research Your Market

One of the most important jobs that real estate investors need to do is to understand our market. Some people look at the MLS every single day. Others drive for dollars to see what’s changing in the neighborhood.

In this article, I’m going to journal my method of doing market research by using the MLS.

Using the MLS

First things first, we’re going to log into the MLS website. For those of you with MLS access, you can log in through http://pro.mlslistings.com

After logging in, click the “Matrix Search” button on the top right.

Finding a good criteria to look for is incredibly important. We want to take a look at all Active/Contingent/Pending/ and Sold properties in the last 100 days. To do that, we highlight the parameters we want and type in 0-100 in the COE date field.

I also selected Single Family Homes because I only want to look at those.

In the City, I started typing “Sunnyvale” to get my results.

Finally, I typed in *remodel* in the Public Remarks field so that I could see all of the homes that were recently remodeled. The * sign means it’s a wild card. We will get results if the description has the word ‘remodel’ somewhere in there. The * let’s us detect words like remodeled, unremodel, whatevertheywanttoputhereremodelitwilldetectanything.

It looks like we have 102 hits!

Note: If you want more filters, just fill them in on the right hand side.

Here’s a list view of all of the properties that match our criteria. By default, we are shown the ‘Agent 1 line’ display. You can customize this to your liking. I actually have another display that shows me the Listing Agent Name, Number, and Email.

Case Study

This listing looked interesting to me. A decently sized property on a HUGE lot with a 210 days on market!! The property’s price was reduced by $300,000! I wanted to dig deeper to see what’s going on with the property.

It looks clean enough, but it’s not updated to current standards.

It also has a giant creek in the back.

If we click on the blue ‘TX’ button in the middle of this sheet, we can see the tax records of the property.

Reviewing Tax Records

These tax records are public information. It’s how people can figure out how much you owe on your house and how much equity you might have. As we can see here, the owners purchased the property in 2005 for $735,000 with a $350,000 conventional loan, and refinanced the property 3 more times for $100,000, $417,000, and $83,375.

If we look at a neighboring comparable, we see that one property with similar sqft, lot size, and bed/bath/year built sold for $2,700,000. Of course, this property may have been rehabbed with high quality finishes and doesn’t have the creek in it’s back yard.

Analyzing Market Data

If we look at the market trends, we can see that the median sales price in Sunnyvale has decreased from it’s peak in April/May of 2018. In December, Sunnyvale’s list price dropped significantly. This could be due to sellers pulling their properties off of the market due to the slowdown and deciding to keep their properties until the Spring.

These charts show a similar story, where Sunnyvale home prices have gone down, then recovered somewhat.

Make This a Habit

By looking at the market on a daily basis, we can see what the homes are selling for on the market. We can look at the prices of junky homes that need some TLC (tender loving care).

If those homes can sell on the market for ~$1,050,000, then we can safely purchase them for under $900,000 off market and put them on the market after cleaning them up for a quick profit. This is called ‘whole-tailing’.

We can also see what rehabbed homes in a certain neighborhood will go for.

If we get good at researching our neighborhoods, then we’ll be better investors. Take the time to understand your market and you will be a successful investor!

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