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Charlie Glahe WIN Broomfield

How to conduct your own basic market research

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If you're entering the real estate market as a buyer, you have plenty of work ahead. Like any other major project, it helps to take the homebuying process one step at a time, and to be as patient as possible. To enter the market with a sense of authority and an expectation of how much you will spend, it's smart to gain some insight first. This holds true for any major financial undertaking. Gaining an understanding of the prospects and risks in a future business venture is known as market research. Businesses have been known to spend millions of dollars on market research before developing a product or making a major investment. Of course, as a prospective homeowner, you don't need to shell out a fortune just for some research. Still, it's a good idea to go into a home purchase with as much knowledge about the market as you can gather. 

Understand the basics
Real estate is a complicated subject that some people spend their entire lives working to understand. While you're not going to become an expert overnight, and a real estate agent or broker can do a lot of the heavy lifting for you, it never hurts to do your own research before jumping all the way in. 

First, it helps to wrap your head around the basic economic principles that underpin the housing market. As NerdWallet pointed out, the terms "buyer's market" or "seller's market" probably ring a bell if you're at all familiar with real estate. Many experts, including NerdWallet and The Washington Post, will agree that the U.S. housing market in 2016 generally favors sellers. Now that the country has more or less recovered from the 2008 recession, more people are in a position to buy a home. {I would add one more sentence here about why the fact that more people are ready to buy means it is a seller's market, especially now when inventory is so low, considering your audience is people who know nothing} 

While this is the national trend, it doesn't hold true in every city, and there are always caveats and granular factors to consider. NerdWallet recommended approaching the search for a house with patience. Since sellers today have plenty of buyers to choose from, it will be harder to find that affordable dream home - but it's still possible.

Along the same lines, hopeful buyers should also expect to pay a little more than list price. This is where it pays to do your homework. If you've decided on a city or general area to look for a home, research the typical prices in that area. Even better, look at what homes sold for one year or even five years ago to get an idea of how much demand has grown or shrunk in that market. This will give you more power to negotiate a better deal. NerdWallet suggested using data from the National Association of Realtors, which details home sales trends at the national level as well as for most major cities. 

Digging deeper
Before getting into the housing market, it's very helpful to understand what exactly you want in a home. While location may be the biggest factor in a home's list price, there are many more forces at play that are harder to understand. Knowing exactly what you want in a home, as well as what you don't want and what you could live without, is a great early step in preparing for a purchase.

In most cases, you can rely on a real estate agent to provide you with accurate information on the local market and the price of homes similar to what you're looking for. You can also begin doing some of this work yourself before speaking with an agent. This can go a long way toward helping you set realistic expectations and setting your focus.

Using sites like Zillow or Redfin, prospective buyers can look to see what homes tend to sell for in a particular area. These services can also show you what you'll get in a certain price range. The Federal Housing Finance Agency also has a helpful tool for homebuyers looking to do some basic research. Their House Price Calculator can provide an estimate on a home's current value given the original purchase price and date. This might be helpful if you find a home you like that isn't on the market, since this information can be acquired from public records. 

Searching for a new home isn't easy, but a little preparation goes a long way.