LIST LOW TO GENERATE MULTIPLE OFFERS

by samia cullen

In today’s active real estate market, a common strategy adopted by sellers is to list at a relatively low price, hoping to create interest in the property, generate a multiple offer situation and push up the sales price. But what are the inherent risks of that strategy?

One obvious risk is that the strategy may fail to generate multiple offers.  If the seller receives only one offer at or below the asking price, the seller is not obligated to sell the home at that price. However, under the terms of some listing agreements, the seller may be obligated to pay a commission to the listing agent if the seller receives a full price offer without contingencies. Consequently, a seller adopting this strategy should be aware of and comfortable with the terms of the listing agreement.

Sometimes when a seller does not receive any offers after listing the home at what they thought was a low price, they are tempted to abandon the strategy and increase the list price. This approach is likely to create a stigma on the property and back fire, with the property ultimately selling below fair market value.

Listing low is a strategy that has been proven to be successful in generating the best selling price for properties in today’s local market. However, this strategy may not be the best in a soft market, and even in a strong market some sellers may not be comfortable with the approach.

My advice to sellers is to not list their home at a price that they are not willing to accept. Use a market analysis prepared by a knowledgeable local agent, discuss your goals and look hard at the different pricing strategies suggested by your agent,  then choose the strategy that best matches your goals and personality.