If your risk tolerance is low, skip this one because this is not for you. For the bold, listen up, because here’s why listing slightly below market value can work in your favor and how it can ultimately maximize your profits. As the title suggested, its "not recommended for everyone." Understandably, some simply can't stomach the possibility of selling their precious home less than what its worth. It might sound counterintuitive, but it’s a savvy strategy that often leads to faster sales and higher offers. Here we're going to discuss why this works, the psychology behind it, and real life examples.
1. Attracts More Buyers
A lower price point generates more interest from potential buyers. When your home is perceived as a great deal, it draws more traffic to your listing, showings, and open houses.
Why It Works
- Wider Reach: More buyers will see your home in online searches and consider it within their budget.
- Competition Builder: Increased interest often leads to multiple offers, which can drive up the final sale price.
I had a client in The Heights who listed their home $10,000 below market value. The buzz this created resulted in a bidding war that pushed the final price $25,000 above what they’d originally hoped to get. This is just one of many examples this strategy was implemented. I'm sure you've seen this happen too.
2. Generates a Sense of Urgency
When buyers see a home priced slightly below market value, they feel a sense of urgency. If you've ever looked at homes for sale online, whether you're just looking or genuinely in search of your next home, you understand this urgency very well. You, like many others, know it’s a good deal and fear missing out if they don’t act quickly.
The Psychology Behind It
- Buyers may skip overthinking or trying to negotiate, focusing instead on making a competitive offer.
- Fear of losing the property motivates buyers to submit stronger offers sooner.
3. Sparks Bidding Wars
Listing below market can create competition among buyers, leading to multiple offers. This bidding war can drive the final sale price well above market value. Why do buyers do this? That is a great question. Buyers tend to make higher offers during a bidding war for several psychological, emotional, and practical reasons.
- Fear of Missing Out (FOMO): Competing offers create urgency and the fear of losing the property.
- Competition Mindset: Buyers are motivated by the desire to "win," which can overshadow financial caution.
- Scarcity Effect: Limited inventory increases the property’s perceived value.
- Emotional Attachment: Buyers envision themselves in the property and are willing to pay more.
- Market Justification: Buyers rationalize higher bids based on comparisons or future value expectations.
Now I've been on the opposite side of these multiple offer situations too where I represented the buyer. I can tell you with absolute certainty that no amount of logic or reassurance that there are other properties out there, will convince an emotionally invested buyer to let go of a property. Not when they've already envisioned their new life in it.
Advantage of Bidding Wars once an offer is accepted
Many agents, myself included, will say that the real work begins once an offer is accepted. Particularly, after the inspections. Buyers can use the option period to negotiate repairs or concessions, take the property "as-is" which is not likely, or walk away from the sale completely. When the buyer who is under contract knows that there are others waiting on the sideline praying for this deal to fall through so they can swoop in and grab it, they are less likely to ask for outrageous repairs, concessions or in some case, anything at all. Because they know that the seller has options. And if they don't play nice, the seller can decline any further request and gift the sale to another more agreeable buyer. And that, my gentle readers, is a great position to be in as a seller.
4. Positions the Home as the Best Value
Listing below market doesn't exempt you from putting in the work to showcase your home in the best light. You still need to keep it in pristine condition, do staging, make necessary repairs, maintain the landscape, and take high quality, eye-catching photos. The goal is to put your home up again others of "equal" caliber and show that it is a better investment, even if it’s only marginally less expensive.
The Perception Advantage
- Buyers focus less on small flaws or compromises.
- They prioritize securing the deal over nitpicking the details.
5. Leads to Faster Sales
Homes priced below market often sell faster because they stand out. In a competitive market, being the most attractive listing means you’ll close the deal while others are still sitting.
Why Speed Matters
- Shorter time on the market reduces carrying costs (mortgage, maintenance, insurance, utilities, etc.).
- A quick sale keeps the momentum going, helping you transition to your next property seamlessly.
6. Helps in Soft Markets
In a buyer’s market, where there’s more inventory than demand, pricing below market can give you an edge. It grabs attention in a sea of listings and positions your home as a must-see property.
The Bottom Line
Listing your home slightly below market value isn’t about losing money—it’s about creating buzz, driving competition, and ultimately maximizing your sale price. It’s a strategy that works particularly well in competitive markets and for sellers who want to move quickly.
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