The starting point is the seller. As the owner they can price the house however they want. Generally depending upon how much they paid for it, how much they have left on their loan and how much of their own money they have put into the home itself (renovations). The other thing is comparables. How much are other homes in that area being listed for? Why would you list your house for 70,000 when betty sue down the street just sold her house that has the same amount of beds and baths as yours for 130,000? You wouldn't. If in your example a house is appraised at 65,000, and the person is listing it for 150,000 the buyer will be made aware of this during the due diligence time period. If they are doing a loan and this happens its not always guaranteed that they will qualify to get it.