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Many may think that these three words mean pretty much the same thing, but in real estate they are very much distinguished in concept. 

Price represents the dollars that a particular buyer agrees to pay and a particular seller agrees to accept under specific circumstances surrounding a transaction.  Price is an accomplilshed fact.  Individual motivations and the particular conditions surrounding a sale affect what specific buyers and sellers agree to.

Cost is the total dollar expenditure for labor, materials, or profit required to bring a property into existence.  Cost applies to production not exchange and is not synonymous with value.  Sellers often think that when they sell their property they should be able to recoup the cost of improvements.  However, the market does not value the improvements based on their original cost.  If a gourmet cook has remodeled his kitchen for over $30,000, the typical buyer in the market may value the upgraded kitchen for only a fraction of its cost.

Value, as of a certain time, represents the monetary worth of goods (property) and services to buyers and sellers.  Value is conceptual in nature and is influenced by economic forces such as supply and demand.  That is why the value of homes have recently decreased - there is too much of a supply and not enough of a demand. 

Price is definitely affected by both cost and value and that is why it is so important to understand market conditions and price accordingly.  Also, when considering major home improvements, understand that these improvements will greatly add to the enjoyment and lifestyle of the current homeowner, but may not necessarily be viewed as the same added value to a later buyer.  Overimprovements may even be detrimental to a future appraisal, where it would be difficult to find comparable properties. 

 CMA's from a realtor are extremely helpful in determining correct price as they are based on current market conditions.  In today's difficult market, a seller needs this expert realtor assistance to be priced competitively.