(I saw this come across on a search query for one of my other real estate blogs – so I thought I’d answer it).
The short answer is – the Seller sets the asking price with the input of their Realtor or other real estate professional. The eventual sales price of the home is determined by agreement between the buyer and seller.
One of the most important roles a Realtor can serve for a buyer or seller, is that of consultant.
A Realtor brings to the table his knowledge and experience of the sales and transactions in the local and surrounding neighborhoods.
When I go to a listing appointment (or many times beforehand) I always have prepared with me a CMA or Comparative Market Analysis for the property.
This CMA looks at two main things:
1) What have similar homes sold for in the recent months? Including the days on the market, any closing costs paid, etc.
2) How many similar houses are on the market right now and what are they listed for.
Based on this info, I put together a price range of what the sellers should expect to receive if they were to list their home.
When I visit the house, I make a list of recommendations on what they can do to better showcase their house. Sometimes these recommendations can add a lot of value to the house – in other cases it will simply make the house sell quicker.
But then it is up to the sellers to determine where the price of the home will be. And they should also determine how much money they need when they sell their home and need to buy another one.
If the Sellers need help with this last item, I will assist them by putting together a “Net Sheet” which will show what they could expect to clear from the sale of their home at the price they want.
But I usually wait until an offer is made on the house before I put together a Net Sheet (at the offer price).