I have noticed a bit of trend in my own neighborhood, overpriced homes for sale!  Now, as a resident of this community I am all for increased sales values as it helps me - however some of the listing prices I've seen make me gasp!

Why is a listing price that is too high for the area bad?

In the case of the home in our area, this means that they sit there.  The market is too tight for a potential buyer to make an offer that, while priced correctly, would be seen as low ball to the seller. It is best for them to move on to a seller with a realistic assessment of their homes value.  As they sit, the inevitable price drops happen and now the consumer wonders "what's wrong with the house" since they are seeing other homes (priced correctly) fly off the market.  The ultimate result may be the seller receiving less for their home than if they had priced it correctly to begin with.

How do you price a home correctly?

Ask your Realtor for a recent list of comps for your subdivision of similar sized homes.  Pricing is mostly done by price per square foot, but the overall selling price of homes in your subdivision should also be taken into account.  A formula of "this is how much I paid for my home" + % of natural price increases + the actual cost of any updates/repairs/upgrades = sales price is not an accurate formula.  Consumers expect homes to be in good repair and aren't going to pay more because you fixed something that broke.  A rule of thumb is to remember your home is only worth what someone is willing to pay for it (and what the appraiser says...but that's another blog). A Realtor will know market trends and be able to compare your homes value accurately.....HOWEVER.....

Interview different Realtors before you sell

I have heard stories of consumers who go with the agent who says they can sell their home for the most. I am assuming this is the case for the properties in my area.  Instead, ask questions of a few Realtors - ask about pricing and how they arrived at it, ask them about market trends in your neighborhood, ask them how they market a property. Ask to see some past listings online (this will help you avoid agents who take horrendous photos to market your property)  Ask them the average days on market for home sales in the past few years.  This should give you a good feel for who is going to represent you and your home the best AND gain you the most money in your pocket.

In the end it's your home

I will be the first to admit that I have listed homes for more than I felt was realistic. I always communicate this upfront to my clients, but ultimately it is their home.  We usually have an agreement and a set time frame if the home doesn't sell that we will then market it at the price I suggest.  Your home is an important investment - take the time to partner with a Realtor who can help you achieve your goals.