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If you're selling your house, one of the first steps you'll take is setting an asking price, a maneuver that requires the ability to find the perfect balance between attracting solid offers and ultimately receiving top dollar.

If you're working with a Realtor or other industry professional, you'll probably hear talk of fair market value, which typically means the highest value an educated buyer will pay. Fair market value is usually not the asking price.

Many agents will begin by conducting a competitive market analysis of your house and give you an estimate of the fair market value of your home, which is a range that will fluctuate depending on the housing market in your area and how much similar homes in your neighborhood are selling for. 

As you work with your agent and set your price, you'll want to recognize the factors that may prompt you to raise your asking price too much when it isn't warranted.

Some of those factors include:

• Upgrades have been added. While many home improvements will help you recoup a good chunk of your investment, it won't give you 100 percent of what you paid. Also, the more personal the improvement—a swimming pool, a sunroom, purple floors—the less likely it will be viewed favorably by potential buyers.
• The need for money.
• You're moving to a higher-priced area.
• The original purchase price was too high.
• The seller lacks factual comparable sales to prove what the market value is.
• The seller wants bargaining room (listing more than 1-3 percent above market value actually reduces bargaining power).
• An unnecessary move, so you're not motivated.