Any real estate agent will tell you that pricing is extremely important in todays real estate market.  A buyer will perceive value in the house that is priced right.  Often times you will see buyers enter into a bidding war with others just to get the house that they see as being priced aggressively.  On the flip-side over-priced houses will languish and will usually sell for less if they sell at all.

Chances are you are always going to hurt yourself by over-pricing.  Why do I think that?

Do you recall the times when a great deal has come on the market.  Everyboday rushed to place an offer because they knew the price was great.  But you soon found out there were a dozen others who had also placed an offer on the property and it was usually above the asking price.

The "great sale price" created an auction type affect and it attracted byers and got them very excited.  This is the same startegy that banks are usining to sell quickly and for the most amount of money. In my opinion this is a winning strategy.

"The I think I can get 20k over market value" syndrome:

Even if someone were excited enough about your house to pay 20k over market, their lender won't make the loan, especially if the value isn't there.  Simply put: No Loan, No Buyer, No Sale.  You need to consider not just what you think the house is worth buth what the bank is willing to loan.  Consider getting your house appraised by a professional.  It will not only shed light on what a neutral third party thinks it's worth but you now have a document that can help justify your asking price.

"The I invested X amount on this" syndrome:

Often times we invest heavily on improvements that do not return full value.  When taking improvements into consideration please be aware that some improvements will have higher return on investments than others.  Kitchen and bathroom improvements are great and the return on investment is in the 75-85% range.  Pools, roofs and septic systems return alot less than what you will invest in them.  The return is usually less than 50%.  Many times improvements that are made on a home are for the personal enjoyment of the people living in the home and does not necessarily add value to the property.

Both sellers and agents should do the market research to ensure the listing is priced correctly. If you can justify the asking price with recent, solid date (sold comparables, appraisal etc) then you stand an excellent change of selling the house quickly and for the most money.

To summarize:  An over-priced house will simply stay on the market longer and usually sell for a lot less than if it had been priced correctly from the very start.