There are many factors in pricing a home for sale. A big part of it is the sales comparables. We also look at the expired listings - properties that expired without selling. Most of the time they expire because they were overpriced.
We also take a look at what is Active in the market. We take a look at how your property compares to other properties in the neighborhood. We factor in whether or not the house is updated, the quality of upgrades, etc.
Hope that helps!
If you are the one determining the Listing Price, watch out! Many agents will quickly agree and play the waiting game with you. After a period of time on the market, they know you will come around and you will agree to drop your price drastically to get any attention away from the Forclosure Buyers who are circling.
Selling a Home is a business decision right now. Just like the stock market or any other business, sometimes you make a lot, and sometimes you break even at best. People are willing to pay a fair price and avoid the REO, short sale game. Listen to those who make decisions in a business like manner.
I hope you have a reputable Realtor to represent you - a Realtor who is familiar with your local market -
Who not only know the numbers on the comp but the reasons behind the comp (two houses have the same sf. # of beds baths, lot size, similar location but different prices, why? maybe one has upgrades, one not); what other inventories are on the market, and what might come on the market; what kind of buyers are out there at the time and what are they looking for, what's the broad market condition, the lending situation and such.
Also, what is your motivation as a seller? Are you in a hurry to sell? If so, you should price it aggressively, or do you have sometime to play with?
These are all part of the consideration in pricing your home. Consult your Realtor to make the best move.