When a homeowner thinks about putting their house on the market, the first consideration and the one aspect of the process that is usually given the most attention is the list price. In that our homes are often the most expensive thing we own, it's not unreasonable to have the asking price take center stage when contemplating a sale. Even if you're not in the market to sell, the gyrations in real estate prices over the past several years have led many of us to speculate about what our house might be worth and what we'd set as the list price if we decided to sell.
Along those lines, it's important to remember the distinction between list price and market value. The list price is your asking price, and market value is what someone is likely to pay for your house. Depending on market conditions, your list price might be pretty close to the market value, or the list price might be a fair amount above market value.
Generally, most people believe that, in a buyer's market like we have today, the list price needs to be quite a bit higher than the market value. Sellers want to leave plenty of negotiating room because they know that buyers aren't bashful about knocking a significant amount off the list price when they make an offer. Even so, it doesn't mean you can shoot for the moon on a list price. If you go over the top, there can be some serious negative consequences with respect to how much you ultimately get for your house. So here are some suggested steps in developing a list price.
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