Price is always an important consideration to property owners planning to sell. One misconception, however, is that sale prices may be based on what other property owners are asking for their homes.

True, other sellers are the competition. Their prices are seen and compared by prospective buyers. They are also properties that have not sold - yet. The only true benchmark for a “fair” price is sales that have already taken place - and closed.

Fair market value is defined as “that price which an informed buyer is willing to pay, and which an informed seller, under no pressure to sell, is willing to accept.” In other words, a fair price is that which has already been paid for a similar home.

When a home sells, and an appraisal is conducted, the appraiser uses comparable data only on closed sales. If homes have not been selling at or near the proposed sale price, the appraisal is likely to come in “low.” This can nix a mortgage approval, or require buyers to increase their down payment. In either case, overpricing is likely to cause a glitch in the purchase process.

When selling, beware of using faulty comparables to arrive at your asking price. Ask your agent to provide up-to-date sales information. Pricing your home based solely on competition can lead to a lengthy wait for the next buyer.