If my property is appraised at $250,000 but the market is soft, at what price should I have my Realtor list the house?

I was reading this Article from Jeff Adams (Real Estate investment Mentor) and found it very educational for sellers and here is the scoop.

One of the main questions every real estate seller should ask him or herself is: “If my property is appraised at $250,000 but the market is sluggish, at what price should I have my Realtor list the house?”

It becomes critical to know how much below that listing price can you expect offers to be from interested buyers.

All real estate, like politics, is local. What is considered an acceptable “percent-off” asking price in one market might elicit a sarcastic, “Yeah, you’ve got a prayer,” response in another.

But assuming the home is in excellent condition and your local housing market is suffering from the widespread weakness we’ve seen in the past year or so, you’ll probably list the house around 5 percent off the appraisal price and get offers from 5 percent to 12 percent below that.

As you suspect, the negotiation game favors the buyer at present as we watch more and more of those “price reduced” hangers swinging in the breeze on “home-for-sale” signs. In June the inventory of homes on the market stood at 3.7 million, up 39 percent from a year ago, according to the National Association of Realtors.

But don’t panic. A seasoned Realtor who has ridden out the last few real estate cycles should be able to guide you in your pricing. Your agent needs to produce a comparable market analysis, or CMA, for you based on recently closed sales, pending sales (both homes under contract and in escrow), average times on the market and the volume of properties for sale in a competing price range.

If the information is available, ask your agent to include the price per square foot of those “comp” sales, adjusted for lot-size variances and excluding new-construction homes. Data should go back no longer than three months and cover sales no further away than a half mile (a quarter-mile is even better if there are enough comps to examine.)

In a flat market, it’s best to consider all offers, even those that seem ridiculously low, because at least you have a starting point. You really want to get into the negotiation stage. On that note, if you’re a highly motivated seller and need to exit your home quickly due to job change, divorce or another compelling reason, expect to come off the price a little more unless you can convincingly obscure your desperation, which is tough to do in a soft market.

It’s also important that you try to contain your emotions in the process because they probably won’t serve you well.
Yes, you may have to bite the bullet here. But don’t hesitate to use that buying leverage if you plan to purchase a home elsewhere once you’ve secured your sale. I wish you selling (and pricing) success.