You are considering selling your home, but are unsure at what price to list it. A home a couple of blocks away sells for $325,000 and another one right down the block sold for $310,000. So, you think to yourself, that maybe you can add $25,000 to the asking price because you did update the main bath a year ago and updated the kitchen recently. If you ask $350,000 it would cover your costs and give you enough to purchase that newly constructed home you have your eye on. Maybe you'll list it for $360,000 just so that it will give you room for bargaining with the buyer. You feel the home is definitely worth it.
It's amazing how many sellers out there think this way. And, because of this type of thought, the property ends up being overpriced and sits on the market for the longest time. Plus, the seller will not budge because he feels he can get that price. Even though the seller feels that the home is worth what he is asking, does NOT mean that that particular home is worth that amount on the market.
The best way to go about pricing a home is to get a Real Estate Agent to do a Comparative Market Analysis or CMA. What the Agent will do is take recently SOLD homes within the same area, similar to the home he is doing an Analysis on, and will check to see the price they sold for. Of course, no 2 homes are exactly alike, so some adjustments are made to determine the listing price. What needs to be understood is the fact that the SOLD price may be different from the LISTING price. They are not necessarily the same. The listing price is just the asking price. The comps are done strictly on the SOLD price and on homes in YOUR AREA, NOT to similar homes in another county or even in another state. Also, a Market Analysis is NOT an appraisal. Only a Certified Appraiser can give you an appraisal on your property.
What the agent may also do is figure out the price per square foot using the comps. He will then apply that to 
your home. Of course, if you have more property with the home the price will be higher, less property, price will be less. It pretty much varies as to what exactly your home has.
Market conditions have a lot to do with it also. Just because the home down the street sold for $325,000 a year ago, does not mean that it will sell for the same amount now.
Basically, many variables go into pricing a home, which must be considered. A Real Estate Agent will give you a FREE Market Analysis for you, so you have a better idea at what price to list the home. The agents are there to help you market and sell the home at the right price and in a reasonable amount of time. You should listen to their advice because that is the area of their expertise. Would you contradict a doctor's diagnosis? Or argue with a lawyer's advice? So why not listen to you real estate agent? They do have the knowledge in their field just like doctors and lawyers do in theirs. Have some trust in their suggestions.
Excellent post!
Frances:
Thank you!
Robert:
I've been down that route, also. Maybe we should bring this post to our listing appointments for the sellers to read. You think they would get the idea?
Mike & Rayna:
I agree. Sellers seem to think that if they spent xxx amount on improving the home, then that is how much they have to increase the listing price.