Every day I scan several news sites quickly and see what is happening or what there is of general interest. This morning on MSN news I found an article titled "40 Essential Tips for Selling, Buying, and Owning a Home".
Being in an area of some interest I decided to read through it and the 9th point struck me.
The 9th point stated this:
"SELLERS: START A BIDDING WAR To entice buyers, consider listing a house for slightly less than the market value. Multiple offers can lead to a bidding war in which potential buyers go back and forth increasing their offers, and the home could wind up selling for above the market rate."
Based upon my limited knowledge of how the system works this made perfect sense, in any competitive market would not the price rise surpass the normal listed price and bring in significant gains to seller!?
Now I must admit, this is not my area of expertise, but anybody who knows me also knows I have an appetite to learn and research anything and everything. So, I looked up a few articles on the subject to see what others thought and if this was in fact a great idea. I figured it must be, as there appeared to be a lot of it going on, so it must work.
A couple of articles on the top of search engine caught my attention, now these were both Canadian articles but appeared to be from reliable sources so I decided to read deeper and hopefully learn.
The first was from Huffington Post and the title drew my attention, as it was "Why You Shouldn't Sell Your House In A Bidding War". Wow - this one appeared to be contrary to the MSN article, and I was interested in digging deeper and trying to find out if it was based upon anything solid, simply an opinion, or what. So I began to read.
The second article, another Canadian article from Money Sense was titled "Should I underprice my home to start a bidding war?". This one seemed from the title at least to be somewhat more objective, and I figured it was perhaps also a good read.
I however finished both articles and was somewhat confused, so will perhaps look for more. Both articles seemed to conclude the same, which actually was contrary to the MSN news article.
Quoting from the articles:
"In almost all cases, we've found that on average, houses that sell using the traditional method have a higher success rate, and they also sell for a higher price."
"According to a study published in the Journal of Economic Behavior & Organization overpricing and underpricing a home for sale actually has counter-intuitive results."
"According to researchers:
–> sellers who listed their homes 10% to 20% higher than other homes in the neighborhood saw a slight increase of 0.05% to 0.07%, on average, in the final sale price (which translates to an extra $117 to $163 in the final sale price);
–> however, sellers who listed their homes 10% to 20% lower than other homes in the neighborhood saw a slight decrease of 0.05% to 0.08% in the final sale price (which translates to a loss between $117 and $187 from the final sale price)."
The two articles are here if you want to read the full articles:
Article 1 - Huffington Post - Why You Shouldn't Sell Your House In A Bidding War
Article 2 - Money Sense - Should I underprice my home to start a bidding war?
So the jury is still out, I am not sure what the answer is yet! More reading to do.
But I thought I would share it with friends here on ActiveRain; and hopefully get some insight from others and their experiences and expertise. I had thought perhaps this was always a good idea.
The Money Sense article also stated "Still, there are always exceptions to the rule. According to one New York-based real estate broker, overpricing a property works best when inventory is low. " So there may be times it works, but right now Realtors in our area seem to be using it a lot, perhaps it is inventory.
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