When you sell a home, one of the biggest factors is pricing. A home that is priced right will attract the most potential buyers and sell very quickly. If your home is priced too high the interested buyers will be turned off, or disappointed when they see your home, thinking more was there to justify the higher price.
The longer a home is on the market the less it will bring. Potential buyers will typically question why a home has been on the market for a while, and being overpriced isn't the first reason that pops into their mind. Often when a buyer sees your home has been on the market for six months or a year they start asking the question "What's wrong with that house?"
Sometimes people will price a home higher to allow for negotiation room. This is also a poor plan. If in the process of doing a market analysis you discover that your home is worth $150,000 (for example) then you need to price it near that figure. A good trick is to see at what percentage to the list price the comparable homes have sold at. If you find that the average home sells at 94% of the list price then you could list it at $159,000. However I've had great success pricing it much closer to the actual market value from the start. Like maybe listing it at $154,950. That's how I've managed an average of 96% of list price on all homes sold. This is 5% higher than the Metro KC average.
The best gauge for pricing your home is to look at what's sold and for how much. If you see a home that was on the market for a long time, it's not as good to compare against. Stats show that after a home has been on the market more than two months you start loosing value. At six months the average home sells at 90% of list price and at one year it is down to 84% of list price. So try and use homes that sold in under 30 days. These homes are typically priced well and will sell close to list price.
A good professional Realtor with a history of quick sales and a high list to sale price ratio will be able to set a price that reflects market value. Not only can they make that informed decision, they will be able to show you the numbers and explain what factors justify your homes market value.