If the last home sold for $407,000 and yours will be fully remodeled and have better views, I would list for a bit more than $407,000.

But, really, you need to speak with an experienced agent to really get their advice.

Exactly...

functionthenlook nailed it. Interview several local Realtors. Get actual comps. Then specifically discuss pricing strategy. In my market, there are extensive closing costs for both the sellers and the buyers. Huge. Make sure you get an accurate Sellers Net Sheet so you can see the costs involved. Passing on sellers closing costs to the buyer in my market would be counterproductive and serve to hold back the ultimate price and significantly reduce the number of interested buyers. Having said that, check with each Realtor you interview to see the impact in your market.

If you are naive and don’t know what you’re doing you should get a good realtor to help you.

Throw out the Zillow estimate. It is unreliable.

While you are completing the preparations, go ahead and interview three full-time, established agents who work in your area. Have each of them create and present a comparative sales analysis of your home and recent sales. While you interview them, get their opinions as to pricing, the market and what additional items they think may need to be addressed prior to listing.

Buyers hate to see unfinished projects and deferred maintenance. It may prove better to finish the floor or provide a seller's credit for finishing it. The unfinished floor may be a drag on your sale. You need to find out. The agents will tell you.

You need to educate yourself about psychology and pricing. If you get this right, it will sell very quickly for a really good price. If you over price it, you may lose the momentum. If you underprice it hoping for a pricing war, you may cause serious buyers to walk away. The house down the street may have sold for $407, but it may be smaller, in bad condition or have an extra bathroom. Interviewing realtors will help you find out where you stand. This is why you interview at least three. So, you can get multiple viewpoints points from professionals.

Understand how people shop for houses today. They do searched in groups of 10,000, 25,000, 50,000, 100,000, 250,000. If you list for 399,000 most of your buyers will come from the 350-400 range. This means they are reaching to attain the 400,000 house. The next group will be searching 400-425. If 407 was fair value, I'd market the at either 409,000 or 419,000. This will catch the eye of the 400-450 market. You will seem like a bargain. That is only if the property is worth it. I hope this makes sense. There is a bit of an art to pricing.

Last, commissions are negotiable, too. Bargain for it. It's real money. Buying and selling real estate is the last of the great horse trades.

How do you do the seller’s credit? Do you price higher, then concede, or do it all up front?

EDIT: realtor.com and redfin price the house higher than zillow and don’t have complete information, so I’m hopeful.

What do you mean by seller's credit? Do you mean giving the buyer a credit for closing? Not all buyer's will ask for closing credit.

Worry about the bottom line number when you get an offer or offers. An offer of 400K with the seller paying a $10,000 buyer closing credit (paid at closing) isn't as good as an offer of $395K. Negotiate the buyer closing credit when the offer is received.

Price it correctly from the start. Don't play games. I think there is another thread here detailing what happened when the seller underpriced the house in hopes of a bidding war. Look for it.

Seller credit issues are best discussed with the realtors that your are interviewing. Forget Realtor.com, Redifin or Zillow. They aren't accurate for your purposes. You need a comparative sales analysis of closed, pending and active listings. None of those sites will provide a complete picture. Start looking for realtors.