Wisconsin Real Estate Sales Practice Exam

What is the first step in conducting a market analysis?

1. Comparing subject property to similar properties

2. Evaluating property tax records

3. Inspecting the subject property

4. Calculating previous sale prices

The correct answer is: Comparing subject property to similar properties

The first step in conducting a market analysis is to compare the subject property to similar properties, also known as "comparables" or "comps." This process involves identifying properties that are similar in key characteristics such as location, size, condition, and features to the property being analyzed. By examining these comparables, a real estate professional can gauge the current market value of the subject property based on the sale prices and previous transactions of similar homes. Comparing similar properties provides a foundational understanding of the local market dynamics, allowing the analyst to derive a more accurate valuation. The data gathered from this comparative analysis can help in determining an appropriate pricing strategy for the property and informs potential buyers or sellers about where their property stands in comparison to others in the market. The other options, while relevant to the overall analysis process, typically follow after identifying comparables. Evaluating property tax records, inspecting the subject property, and calculating previous sale prices are all important aspects of the analysis but rely on the context established by the comparison to similar properties. This comparison is integral because it serves as a benchmark for valuation based on actual market activity.