Whenever someone asks me that question, I wonder if they realize how complicated a complete answer would really be.  All they really want to know is, "How much are they asking for that house?"  But what the seller is asking and what it sells for may be two very different numbers.

Just this morning, I did comps for the 'Active' houses and the 'Sold' houses in a local neighborhood.  While the price range for those for sale was $279,900 to $290,000, the price range for properties sold in the past six months told a different story.  $230,000 to $262,000.

So when a house sits on the market for awhile, and the seller wonders if it's overpriced, here's what they should do:  Let the market tell them. (If the house is listed, they should discuss what that means with their agent.)

But assuming the house is being properly marketed, properly prepared for showings, and all showings feedback has been addressed if possible, here's some general guidelines suggesting what the market is saying about price in my local area (between Denver and Boulder, Colorado):

If a house is receiving very few showings (0 to 2 per week), it's overpriced by $10,000 or more.

If it's receiving a good amount of showings (5 or more per week) but no offer: it's very near the right price. Lowering it $5,000 would probably do the trick, especially if that reduction brings you to the next 'magic line'. ('Magic line' is my term for those price points that buyers have a difficult time getting past psychologically.  For instance, a buyer might look at a house listed for $299,900 but not one listed for $305,000. Every $25,000 is a magic line, and in lower-priced homes it's every $10,000.)

So, how does someone end up in the unhappy position of being overpriced?  There's many answers.

There may be a circumstance they were unaware of, such as the neighbors three big, mean dogs that throw themselves against the fence during every showing.

Circumstances may have changed since they listed. For instance, another similar house or two came on the market at a lower price. 

They may have chosen the agent that promised to sell it for more than anyone else suggested, despite what the market was saying. 

They may have chosen an agent who listed for the lowest commission. Perhaps that agent didn't take the time to study the market and give the seller good advice.

They may be 'upside down' and are trying to bring as little money to the table as possible.

I could go on and on. But whatever the reason, if the seller has a time frame that they need to sell in, a response is demanded. There's no sense in taking it personally, the market is completely impersonal and impartial.