SWOT Analysis for Real Estate: Guide and Templates

Have you ever stopped to think about your weaknesses and strengths as a professional? And what are the factors that can boost or impair your performance? That’s exactly what SWOT analysis in the real estate market proposes.

Therefore, the SWOT analysis should be the kick-start to a career of any professional, especially for those who are taking the first steps in the real estate market. In this article, we guide you about what SWOT analysis is, how can you apply it to real estate, and tips for a successful SWOT analysis.

What is a SWOT Analysis?

This technique has the role of recognizing the panorama of a business and its labor market to then eliminate the negative points or even make the positives even more profitable.

SWOT analysis; Strengths, Weaknesses, Opportunities, and Threats has become an increasingly famous strategy in companies, thanks to its high level of success. Understanding and applying the SWOT technique is considered one of the best ways to enter new markets and improve current results.

It is noteworthy that the matrix also serves as a helper in making important decisions. By presenting the organization’s full diagnosis, the risks to take some strategic steps —such as launching a new product, investing in marketing strategies, expanding the target audience, are smaller because you already have a clearer vision of what the business needs to grow successfully.

In order to understand the objectives of a SWOT analysis clearer, take a glance at the following list;

• Anticipate market movements;
• Assist in the decision-making process;
• Study the internal and external scenario of the company;
• Offer more security when investing;
• Know the position of the business in the face of competition;
• Indicate good alternatives for action.

Why Do SWOT Analysis On a Real Estate Investment?

Like any other investment, SWOT analysis is indispensable for those who want to invest in high-end real estate. Besides helping investors take certain essential real estate care —such as assessing profitability, verifying the cost-benefit of the property, and researching a construction company that meets their needs—the tool also provides in-depth knowledge of factors directly linked to the professional and market factors.

With the help of a SWOT analysis, it is easier to assess the current situation/condition of your real estate market, making the professional start to make more accurate investments. In the next topic, we will show how the application of the matrix in the real estate segment works.

How to Apply SWOT Analysis in the Real Estate Market Valuation

After knowing SWOT analysis and its importance at the time of betting on investment in the real estate market. Let us move on to the practical part: how to apply it in the real estate market.

The SWOT analysis is done through the gathering of information from two environments: the microenvironment, which shows the internal factors of the company, that is, everything that is directly linked to the business — such as customer card, staff, target audience, among others. And the macroenvironment, which is related to external factors and, therefore, is not the responsibility of the company itself, but rather the market. Sociocultural, economic, and demographic issues are some examples of external factors analyzed.

To start assembling the matrix first, we need to divide a sheet into four quadrants, which will represent the factors of SWOT: Strengths and Weaknesses, related to the microenvironment, and Opportunities and Threats, macroenvironment. Then just collect the information from each group.

Below we present an example of applying the analysis in the evaluation of the real estate market:

Strengths

This quadrant represents all the positives of the business. It is the time to raise all your qualities as a professional in your area of expertise, such as:

• Knowledge of the region where it operates;
• Ease in dealing with customers;
• Know  calculations of the area, such as ROI when investing in real estate ;
• Find the best cost-effective properties to invest in;
• A specialist at the time of assessing property prices

After listing qualities, you will know which aspects you should improve even more to stand out as a real estate investor. A good tip, if you have difficulty filling this quadrant, is to make a comparison between your skills and those of other professionals in the area.

Weaknesses

Still, in internal factors, the time has come to punctuate your main weaknesses as a professional. Although it seems like a “hard” task, this part is essential for SWOT analysis. Therefore, try to have a well-honed self-critical sense during the listing. Here are some examples to use as a comparison:

• Difficulty keeping up with real estate marketing trends;
• Does not have many luxury properties to present to customers;
• Does not know how to choose the right construction company to work for;
• Is not always punctual with commitments;
• Do not take advantage of technological opportunities in your real estate.

This quadrant should be used for you to improve everything that is an obstacle in your work, so strive to point out all weaknesses.

Opportunities

After listing the microenvironment factors, the time has come to work with external factors, starting with the Opportunities quadrant. Here, you should point out all the news of the market that can leverage your career as a real estate investor.

For example:

• Companies showing interest in closing partnerships;
• Dissemination of high standard properties in strategic regions with prices

Keeping an eye on the news of your business is a fundamental thing to get out of the comfort zone and grow as a professional. Therefore, be sure to constantly update yourself on your market through magazines, newspapers, internet, among others.

Threats

Finally, the last quadrant is separated so that we can raise all the threats of the career. As well as opportunities, threats are also part of factors that do not necessarily depend on business or professional, but the market situation.

For example:

• Larger real estate companies starting activities in the region where it operates, making competition more fierce;
• Zoning amended by legislation and transforming its best working region into a commercial area;
• Economic crisis financial loss due to customer churn/attrition;
• Violence in its region of work and, consequently, a decrease in property sales

Knowing the factors that put your business at risk is essential if you are not to be taken by surprise. It is always worth thinking about new plans in advance to dodge possible factors that can serve as obstacles to your career.

What Decision to Make from the SWOT Analysis on the Purchase of a Property?

SWOT analysis of real estate market is only successful if you take proper decisions. The evaluation of all factors related to your business should help when the professional needs to make crucial decisions.

 SWOT analysis is only not used for decision-making processes. It is necessary to cross-reference the internal and external factors of the business, to identify how the strengths, weaknesses, threats, and opportunities relate to each other. After all, it is not enough just to collect information in the quadrants. We have to transform the matrix into actions and strategies.

Tips For Making a Successful SWOT Analysis

If you have come this far, you may have already understood how to apply and interpret the results of the SWOT analysis in the real estate market. However, in addition to understanding the step by step, it is also necessary to follow some practices to develop a matrix that helps in decision making.

In this sense, we have set up some tips that, although they seem simple, make all the difference when building the matrix.

Be Realistic

Raising work difficulties and failures is not an easy task. However, every array will be compromised if you are not realistic.

As we have already seen, one of the main objectives of SWOT analysis is to assist decisions to leverage business results. If you don’t list your main weaknesses, it won’t be possible to think about strategies to grow in the market.

Invest In Objectivity

The SWOT matrix should be clear and objective. There is no need to write long texts to explain each factor. If possible, get to the point, as this will already allow you to map your career in the real estate market.

It is worth noting that a degree of distancing during the survey of information is extremely recommended. Although it is a challenge, you should be careful not to involve your emotions during the listing of factors, as this can also interfere with the accuracy of the matrix.

Prioritize The Most Relevant Factors

When lifting the information to fill the matrix quadrants, it is quite common to place excess items. However, while all the strengths, weaknesses, opportunities, and threats you have faced are crucial to your business, you need to prioritize the factors that can be addressed in the short and medium-term.

Therefore, during the preparation of the SWOT analysis, be careful not to leave the lists too extensive. A good tip is to create a hierarchy in each group to define which are the most relevant points considering your current situation to create successful strategic planning.

Free Templates

Now that you know what SWOT analysis is and how to apply it in the real estate market, you can start incorporating it into your strategy by downloading our free and fully customizable templates from below!

FAQs

SWOT analysis is a simple tool to apply, however, much caution is required when lifting the information so that it does not harm the results of the matrix. In general, the SWOT matrix is always making the real estate professional face hard truths, however, it is from the analysis of the business that you will be able to grow in your market. Therefore, make the most of what the tool has to offer to make decisions, which will highlight you in the real estate sector, and to evaluate the profitability of real estate to stay ahead of the competition.