Should I List my home UNDER market value to inspire a BIDDING WAR?

This is bad strategy for the sellers & their agent as if a full prce offer is prsented, technically,  the agent has preformed to the listing agreement and is owed a commisson for bringing a willing buyer at the sellers full price.

Second, if there is a Lender involved, an appraisal may not support the highest price accepted and then what ? Think about that mess it will create later in the transaction after money has been spent on inspections, repairs & Lender fees.

While most agents do not like them, neither do most buyers. The ones that wins the bid is not always the winner. Paying more than market value does not help the buyers in the long run and sets an inflated Comp for later use that drives the market higher as if Joe got x for his home, I want xPlus for mine.

Good morning Scott Godzyk ,

A good topic! Love the question, comments and Congrats on a well deserved featured post! I usually always price at market price and let the market take its course. However, I'm with Nina Hollander comments "It depends".

It's a valid strategy in some cases - but I wouldn't automatically apply it to any home. We're experience a buyer's market so with ample inventory and a motivated seller, pricing at the low end of the recommended range is a good strategy. 

Most sellers are not comfortable with under pricing though.

The problem with pricing in my very hot sellers' market is if you price at what a likely sales price would be, buyers take one look, mentally add on 10% and decide the house isn't worth that much. Buyers expect to pay over list price by 8%-15% depending on the town and type of property. Until we have a more balanced market, I don't see it changing.

I price at market or a taddy below to trigger the process of selling and preserve Fiduciary. The idea of a bidding war while exciting is a tangent. Let us not forget the concept of role reversal i.e. how would you feel? Buying, investing and selling is not complex unless we make it so. Wringing out out every dollar from a sale comes with risk...Greed is no respecter of persons so beware

Excellent topic, I enjoyed the responses since I am always learning.

What happens if someone brings you a full price non-contingent offer and you do not get a bidding war started? Do you have to sell it or pay the commission? 

Wow, lots of conversation this post stirred up. Sounds like you are generally listing at market value, which most agents here are agreeing to. A catching title though. Ha ha. 

Scott, glad you chose to write on the topic of pricing to create a bidding war.

I think you have a strong strategy that will benefit the seller.

Presenting a range so the seller can see what to expect. 

Thanks for sharing.

I prefer to price it as right as I can.  Not too high, not too low.  YHou will attract those in the market at that price and they will know what else is on the market at that price to compare.  Better to get those knowing that is their range, than someone in the heat of hte moment offering too much and then backing out. 

It's not my style and it's going to get you anywhere but offers you don't want to accept in my market.

I have never heard this from a seller. I am sure it is a strategy of some agents. I sugggest pricing at market and let it take care of itself as buyers see it.

Hi Scott Godzyk  Thanks for 'inciting' this though process. I alos would rather suggest a fair market price to start. If that causes a battle, then OK, but at least it's in the seller's best interest.
Bruce

In this seller's market, that would be smart move!!!

Get two set of buyers making their best offers and we cam quick and at a great price for the seller.  I tell it like it is. I give the seller the facts, the pros and the cons so they can make the best decision for them.

Price it in line with current market values! Multiple offer guidelines are needed if you want to play the jump for meat, pitting lots of buyers against each other in a bidding war. But someone can cry foul, get lawyers involved and make it messy. Deal with the multiple offers when they happen but not enough hours in the day to herd agents like cats that all want updates, are running gunning to get an advantage. Too much emotion and energy poured into those drama sessions.

It's interesting how all of this has changed during my 51 years as a broker. Our listing contracts and the legal interpretation was that the price was the price and the terms were the terms.  If a buyer met them, the seller had to sell to him. Now we have listing prices set below what the seller will sell for, and bidding wars the occur even when the listing price is on target.  I personally think both of them have made us close in respect to used car salesmen.

Hi Scott, great post. In some areas of our market, I am seeing a lot of bidding wars on homes that appeared by market analysis to be low, but other areas are not doing the same thing. It is confusing for buyers who think the house is worth XX, but then we show them the sales in the area showing the value to be closer to XXX.

Very good post and message.  Some sellers can handle it, some won't.  Buyers, on the other hand tend to get nervous in a bidding war, especially if they are first time buyers.  Excellent post and message!  

This is a strategy many agents use. In my market pricing right gets the most attention.

Hi Scott Godzyk 

To incite a bidding war isn't a smart marketing strategy, imho. Why not price it at market and let the offers come in. If there are multiple offers I will inform all bidders and allow them 1 opportunity to make an adjustment if they choose to. The banks are what concern me, i.e. the appraisal process.