Setting Price in a Shifting Market

One of the trickiest, and most important, parts of selling or buying a home is deciding how much it is worth.

That has never been an exact science, and the unpredictability of the market in recent years has made it even less so.

Typically, real estate agents look at comparable sales, or comps -- the selling prices of similar properties in the same or similar neighborhoods.

But how far back do you look when you examine those comps? Some agents say they look to the peak of the market, about two years ago. They argue that's about where prices are now in many neighborhoods. Others say they also look at what the owners paid and when they paid it. Still others say that going back a few months is sufficient but that it might not work in some neighborhoods because few houses might have sold or prices might have varied too wildly.

Rusty Wild, an agent with Jobin Realty in Centreville, argues against going back too far because the market has changed so drastically from month to month.

"If you were to look six months back from now, you're going to catch the spring market sales, which I don't think are indicative of the market even now," Wild said. "Prices have continued to drop. Lenders have tightened their standards."

In recent years, Web sites such as Zillow.com have also become useful tools by providing their own take on property values.

"Buyers have become a lot more educated, too, even if they have a buyer's agent, because there are all these Web sites," said Sheila Leifer, an agent at Long & Foster's Chevy Chase-Uptown office.

If you're the seller, how should you go about picking a price tag? First, be realistic. This isn't 2005, when buyers were trying to outdo one another. "Every seller thinks their house is unique," said Tom Bryan, a senior vice president at Coldwell Banker Residential Brokerage. But, he said, "it's the buyers that ultimately determine the value, not the seller."

Look at prices not only for houses sold, but also for those on the market. What is your competition? You probably don't want to be the most expensive house on the block, but you don't want to give your home away, either.

"I think sellers ought to price it attractively, maybe a touch less than the most attractive property," said Sara Rubida, an agent with Long & Foster in Arlington.

Consider offering closing-cost help, free parking, prepaid condo fees and other incentives.