With the summer home-buying season fast ending, panic is setting in among sellers in slowing markets nationwide forced to consider price cuts to unload their properties.

The U.S. inventory of unsold homes hit a record 566,000 units in June. In some of last year’s hottest regional markets, inventories are five times higher than a year ago.

"Buyers are taking a wait-and-see attitude," says Blanche Evans, editor of Realty Times, a trade publication. "It’s the nature of buyers to seek a bargain, and if they think prices are going to go lower, they will wait as long as it takes."

Realtors are advising clients eager to sell to drop their price before the fall/winter sales slowdown. One leading Washington, D.C.-area broker is telling those who want a quick sale now to cut their asking price to late 2004 levels.

Many sellers are ignoring such advice, suspecting agents are just trying to win easier sales for themselves. Yet a growing number of listings are languishing as buyers and their agents perceive them to be too overpriced to even waste time making an offer on.

"Some sellers think agents just want easy sales, but there are no easy sales these days," said Boofie O’Gorman, a top-producing agent in Reston, Va., for Long & Foster, a Mid-Atlantic realty firm. "I’m encouraging clients to make price reductions as quickly and deeply as possible. My advice on new listings is to price where it’s painful now, to avoid it being more painful later.”

So how do you determine if your property is overpriced, and how much should you shave off if it is? Here are recommendations from several real estate experts:

Perish the thought

First, forget about the pie-in-the-sky figure you felt your house was worth. Just like with tech stocks before their 2000 collapse, paper gains aren’t worth crying over -- or holding out hope you’ll regain anytime soon.

To make reducing your asking price easier to stomach, consider instead how much you’ve made on your home. Calculate your annualized investment return based on your downpayment, not your purchase price. You may be pleasantly astounded.

Take a head count

How much interest has there been in your property? If 10 qualified buyers have been through and it remains unsold, it’s time to look hard at a price drop.

Evans offers this simple gauge: “If you’re getting showings but not offers, the buyers think your home is overpriced. If you’re not getting showings at all, the professionals think you’re overpriced.” In the latter case, you may be way overpriced, because the pros aren’t even recommending buyers take a look.

What’s your motivation?

If you don’t need to move, you can sit tight on your price. If you’ve bought another home, can’t afford to indefinitely pay two mortgages and don’t want to be a landlord, the question is how much lower should you go? In that case, cut your price at least by the amount of “carrying costs” you’ll pay on the vacant house until next spring’s selling season, including taxes, insurance and maintenance. To be safe, consider a full year’s worth.

Check the clock

How long has it taken to sell homes in your price range in your area recently? If yours has been on the market nearly half that time or longer, a price cut’s likely in order.

The reason: Buyers are suspicious about homes up for sale more than a couple of months – even if the only thing wrong with them is they were overpriced to start.

A lot to consider

How many listings are there in your area compared with a year ago? The larger the inventory, the more choices buyers have and the more price-competitive you need to be.

If your area’s supply is double that a year ago, it may not be cause for concern, especially in formerly hot markets where inventories were lean last year. If the number of unsold homes rose four times or more, you may want to cut your price sharply now to attract attention in an increasingly crowded field.

Go shopping yourself

On the next Open House day, ask your agent to accompany you on a tour of all comparable homes for sale in your area. Take the measure of each – in terms of pluses and minuses vs. your home – and then set your price low enough that it beats them all.

The advantage here: By scrutinizing the comps with your agent, you can have an open discussion with him or her that should relieve any suspicion about their price-cutting motives.

So what’s new?

If there’s significant residential construction in your area, you may want to make a pre-emptive price cut. Otherwise, you could soon find a nearby, brand-new home priced less than your similarly-sized, aging model.

Reason being: Developers and builders can’t afford to sit on vacant units, or financing costs will devour their profit. They’ll generally cut prices far quicker than existing home owners for that reason.

Especially bad timing

If you’re selling a condominium that’s drawn little interest, you may want to take decisive action. Unlike single-family home prices that have held up despite declining sales volume, condo prices already are falling – off 2.7% nationwide in June from a year earlier – and are likely to drop even further.

The reason: Condominiums historically appreciate fastest in value in the latter part of a rising home-price cycle, as buyers get priced out of single-family homes. Conversely, condo prices fall hardest in the first part of a declining market as single-fame homes become more affordable.

A reasoned half-measure

If you don’t want to cut your price yet, but want to attract buyers' attention, consider contributing to the buyer’s closing costs -- $5,000, $10,000 or whatever the maximum your state allows.

By minimizing the cash your buyer needs to bring to the table, you’re essentially helping them get into your home. You still may have to come off your asking price by a fair amount, but you may entice more buyers to take a look with the closing-cost offer.

Walk a mile in their shoes

Ultimately, the best indicator of whether your home is overpriced is to ask yourself: “What would I pay for my house today?” Put aside sentimental attachments and instead take note of all the home-improvement projects you never got around to.

After years of home sellers making out like bandits, buyers will soon be scoring deals. So at what price do you think your house would be a great deal these days? Add on two or three percent for negotiating room and that may be an attractive asking price – at least for the moment.