Pricing your home is one of the most challenging factors in marketing a home. A saying in the real estate industry is there is always a buyer for every home IF the price is right. So it seems finding a buyer is pretty contingent on finding the right price! 
And some agents wonder why I slave over my comparable market analyses!
A seller normally wants to get the highest price possible for his/her home. A buyer usually wants to pay the lowest price possible for his/her home. The pricing dilemma is to find the area where the seller's price range overlaps with the buyer's price range. Or, by real estate school definition: market value is the price a ready, willing, and able buyer will pay for a home. Ready and able are the keys. I've heard many willing buyers say, "I would pay that much for that house IF I could afford it!" To be ready and able, a buyer must be pre-qualified by a mortgage company saying s/he can afford the house. Otherwise, they are not ready and able to buy, so their opinion of the house value is irrelevant.
In like manner, the seller's opinion of the house value is pretty irrelevant, too. I know I'm really hanging my professional career in the balance with that statement, but don't quit reading yet. Many times sellers want to price their house based on what they paid for improvements, what they owe (Oops, they took out too much equity on a credit line!), or what the home seems to be worth in their minds. Repeatedly I warn sellers that they can ask ANY price for their home, but if they want to SELL their home, they'll have to list their house at the market price.
The only way to determine the market value for a home is to find similar homes in the same neighborhood that have sold in the recent past (usually within 6 months). Finding a similar house that sold in an entirely different neighborhood, doesn't count. Location is a factor in pricing. Condition is a factor as well. Improvements are a factor. And the market conditions. If the house being listed is in tough shape with a worn out roof and badly stained carpet, it will sell for less than the identical, but pristine, house next door. Also, if there are 3 similar houses in the same neighborhood for sale, and only one buyer, the lower priced house probably will get the most serious consideration. Additionally, different improvements add different amounts of value to the home. Kitchens and baths are highest in value adding improvements. It's because of the variables in each house, that a real estate agent's input is important in determining the list price for your home.
(c) Bonnie Erickson 2006
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