In the midst of trying to sell a property in San Diego, many sellers stop and wonder what the fair market value of the home is. Determining the value of your home is more than just crunching numbers. It’s about understanding the local market, recent sales, and appreciating the unique qualities your home has to offer. If you’re planning to sell your home and ride the exciting wave of the San Diego real estate market, you’ve landed at the right place!
This article will uncover five accurate methods to determine the fair market value of your San Diego home.
How to Determine Fair Market Value of a Home
First, let’s understand what “fair market value” means. In real estate terms, fair market value (FMV) represents the price that a property would sell for on the open market between a willing buyer and a willing seller. In this transaction circumstance, both the seller and buyer are in full knowledge of all the facts and are interested in proceeding. For example, if similar houses in your neighborhood are selling for around $500,000, then the fair market value of your home would likely be in that ballpark, provided it has similar features, size, and condition.
Comparable Home Sales in San Diego
Running comparable home sales, also known as ‘comps’, is a crucial step in accurately determining the fair market value of your home in San Diego. Start by identifying recently sold properties in your neighborhood (preferably within the last three to six months) that closely resemble your home. Consider these factors when running comps:
- Square footage
- Bedroom count
- Bathroom count
- Year built
- Layout and style
- Property type
- Amenities
- Interior and exterior condition
It’s ideal if these homes are within a one-mile radius of your property (or less). Take note of their selling prices and calculate an average price per square foot. Adjust this figure based on unique features or upgrades your home may have, such as a renovated kitchen or a swimming pool.
Of course, it doesn’t make sense to compare properties that are vastly different from each other. The value of a mobile home in San Diego will be dramatically lower than a triplex. Stick with similar properties when looking at comparable home sales.
Additionally, consider San Diego real estate market conditions. If it’s a seller’s market and demand is high, your home’s fair market value will be higher too. Conversely, in a buyer’s market with abundant supply, the value might be lower. More San Diego residents decide to buy a house versus rent one as values plummet. Consult with a real estate professional for an accurate comp analysis, as they have the expertise and resources to run more detailed and localized reports.
Methods to Calculate the Fair Market Value of Your San Diego House
1. Comparative Market Analysis (CMA)
One of the most common methods used to determine a home’s FMV is a Comparative Market Analysis (CMA). Real estate agents typically conduct this analysis for San Diego home sellers. Your best bet when running a CMA is to compare your home to similar properties that have sold recently in your neighborhood.
This method isn’t an exact science in real estate. No two homes in California are identical. However, by evaluating the prices of nearby homes that share similar features, you can get a pretty accurate idea of what buyers will offer you. What can you expect for an offer? San Diego saw a 7.6% rise in home prices in 2022. Your home’s value might have increased since then even if you haven’t made any improvements.
How many properties should be included in a CMA? Target at least three recently sold properties that are similar to yours in size, condition, and location. Your real estate agent will adjust the price based on factors that can influence the value. Major upgrades and unique features can sometimes dictate the values.
2. Hire a Professional Appraiser
While a CMA provides a good starting point, hiring a professional appraiser can offer a more precise valuation of your San Diego property. Professional real estate appraisers follow a stringent set of guidelines when determining the fair market value of a home.
First, an appraiser kicks things off with a home inspection. They evaluate the overall condition of your home and its structural integrity. Appraisers also consider variables such as location, lot size, upgrades, and the selling prices of comparable homes in your neighborhood.
Appraisals are especially beneficial in hot markets like San Diego, where competition is fierce. In such markets, a professional appraisal can provide a clear edge and substantiate your asking price. A professional appraisal could help you capitalize on this growth that San Diego’s real estate market experiences. Being confident in the fair market value calculation of your home is key.
3. Online Home Valuation Tools
The digital age has brought about many conveniences, and that includes estimating your home’s value right from the comfort of your living room. Numerous online valuation tools, also known as Automated Valuation Models (AVMs), can provide a ballpark figure for your home’s worth.
These online tools use sophisticated algorithms and vast amounts of data, including recent sales, property characteristics, and market trends, to provide an estimated home value. Popular platforms you’ve likely heard of include Zillow, Redfin, and Realtor.com.
However, remember that these online tools should be used as a starting point! Zillow and Redfin are not walking through your property – so they have no idea what the interior looks like. Oftentimes, Zillow’s Zestimates are off by +$50,000. They might not take into account recent renovations or unique features your home offers, making the margin of error significant.
4. Engage with a Local San Diego Realtor
When you need a precise, local market analysis, nothing quite matches the expertise of a local realtor. Seasoned San Diego realtors spend their days immersed in the housing market, tracking trends, monitoring prices, and building a mental database of property values.
Engaging with a local San Diego realtor to run “comps,” or comparable market analyses, gives you access to that expert knowledge. Comps involve looking at similar properties in your neighborhood that have recently sold, and adjusting for differences between those properties and yours to establish a likely price range for your home.
Realtors know the market nuances and understand how local amenities, school districts, and even the time of year can affect the value of your home. They also have a vested interest in accurately pricing your home, as an overpriced property can sit on the market, while an underpriced one can mean lost revenue.
5. Obtain a Cash Offer from a San Diego Home Buying Company
If you’re looking for a hassle-free sale, another method is getting a cash offer from a company that buys homes directly. These companies, referred to as iBuyers, leverage technology to make swift offers, often within 24-48 hours.
When you contact a San Diego home-buying company, they will assess your property details, location, and any necessary repairs. Using this information and their proprietary algorithms, they will provide a no-obligation offer for your home. You can sell your property for cash in San Diego without the hassle of listing it. The significant advantage here is speed and convenience.
iBuyers like SD House Guys purchase the property ‘as-is,’ meaning you won’t have to worry about repairs or home staging. 40% of sellers would consider an iBuyer offer due to the simplicity and certainty it offers. However, it’s essential to note that these offers may be slightly below the fair market value of your San Diego home, as these companies need to account for the costs of potential renovations and the risk involved.
Determining Fair Market Value with Confidence
By considering these methods, you’re armed with the right strategies to accurately determine the fair market value of your San Diego home. Remember, the most effective approach often involves combining these methods to give you a comprehensive view of your home’s worth in today’s San Diego real estate market. Accurately determining the fair market value of your home in San Diego is crucial for a successful sale.