On the financing and investment sides of real estate transactions, a real estate analyst is employed. Analysts are hired by banks, investment companies, and other entities that provide financing for property purchases and hold real estate portfolios for sale or investment to monitor the market, check appraisal valuations, and analyze portfolio performance. This person usually acts as a liaison between the finance department and the company’s acquisitions and development department, as well as producing financial reports for management.
Real estate financing and investment require a great deal of financial analysis. A real estate analyst usually has a bachelor’s degree in finance or math, as well as real estate investment coursework. Companies that primarily provide property financing or hold real estate for investment purposes may hire graduates. In either case, the primary concern of a real estate analyst is to arrive at accurate valuations based on his professional assessment of the local and national markets.
In most cases, real estate is a long-term investment. Because of the time between sale points and the fact that no two pieces of property are identical, determining the value of property can be difficult. The only sure way to figure out how much real estate is worth is to sell it. The rest of the valuations are just guesses based on market conditions and comparisons.
A real estate analyst is usually used by companies that provide financing to check the validity of appraisals. The market value of a property is determined by an independent real estate appraiser using his professional judgment. Lenders use this judgment to determine the maximum loan amount for a mortgage in the event that the lender needs to repossess and resell the property to recoup the loan. The real estate analyst’s role is to provide quality control for the appraisal process, ensuring that the appraiser follows the company’s guidelines. A shoddy appraisal can lead to the company lending more money than the property is worth in the end.
A real estate analyst monitors the value of a company’s property investment portfolio on the investment side. He keeps track of local and national market indicators, as well as economic and demographic trends, so portfolio managers can make informed decisions about individual property holdings’ future profitability. The analyst usually makes recommendations for new acquisitions and creates financial projections using special software. He also calculates the portfolio’s current value based on market conditions.