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My agent is one of the top sellers. S/He has a technique for pricing a home in a hot area. S/He prices on the low end so that buyers will bid up the price of the property and I've seen this work numerous times. Some properties this agent lists often sell for 100K/200K above asking.
I'm selling a property for my elderly mother who is pushing 100 and will need the money for her care. My question: assume a house is valued by Zillow at 700K and the agent advertises it for 625K because it is a fixer in a hot, desirable area and because the agent is hoping buyers will bid it up to 675K. Assume the actual value of the house is 650-675K. What if a buyer only offers 625K. Even though the house is priced under the market am I obligated by law to accept the offer under the law of "offered at $$$ and accepted at $$$?
Well, the answer you want to hear is.... ALL offers contain some kind of terms or contingencies. It is ALWAYS a judgment call and personal decision to accept or reject or counter any offer. You never have to accept an offer.
The caveat is, if an agent or agents bring you a ready, willing and able buyer and you don't accept, it is possible they could sue you for the commission due... because they did their job.
The reality is, the $625 or $650 or $700K values are ALL speculative until there is an actual buyer with an actual offer. If $625 is the highest offer you get in a competitive offer situation, then an argument could sure be made that the market is speaking, and perhaps $625 is actually the "fair market value".
And finally... ask your top agent these questions! You'd get actual precise answers with your exact circumstance in mind.
A list price is not a contractual offer--so, no, you are never under any obligation to accept an offer made at list price (or at any price). As Diana mentioned, however, you may be on the hook to pay a commission.
Listing for under market value, in the hopes of driving a bidding war, may work in some markets. It wouldn't work in mine as few properties are sold above list price. Tread carefully.
A buddy of mine actually suggested and used this strategy with his realtor. Listed on a low end, tons of showings. After the 2nd or 3rd day offers started bidding against one another. He ended up getting 50K more than what the realtor suggested his asking price should be. Happened just last month.
Wouldn't getting an appraisal clear up the doubts about the proper listing price?
While an appraisal may be advisable in limited circumstances, most people don't want to shell out money for an appraisal. An appraisal is merely an estimate of market value and it is also only one appraiser's opinion. An agent can review the same comparable sales that an appraiser might use.
In the end, it really doesn't matter what an agent or an appraiser may believe is the market value. A property simply needs to be put on the market to see what price it might bring. A listing price, too, doesn't necessarily need to approximate market value if the strategy is to try to develop a bidding war. As is well known, that strategy can work in certain markets but it may not work in others.
There are risks and benefits to any pricing strategy and I would trust the agent you hired since he/she knows the market better than any of us.
But forget about Zillow. Please tell me your agent is not using Zillow.
Only YOU (and your siblings if they are involved) can make the choice to accept an offer or not. There’s nothing illegal about negotiations in the typical RE scenario.
If the house gets bid up over whatever the appraisal amount ends up being if there’s a lender involved, the buyer would have to pay the difference since the bank won’t finance more than it’s worth, or the buyer might ask for a lower price. Although, at your price point, I doubt this will become an issue.
Wouldn't getting an appraisal clear up the doubts about the proper listing price?
Not what the OP asked though - pricing low to spark a bidding war is a marketing strategy, not a question of what the house is realistically worth
OP, what if the 625K offer was all you got, even if it was listed for 675K or even 700K. Would you still sell the house for that or would you take it off the market, maybe do a little work on it and then re-list? If you would take 625K if that was the only offer, then even if you don't have a bidding war, you aren't really risking much.
And if "the market" thinks the house really is worth 650 or 675 and it's an active enough market, then you should hopefully get in multiple offers or maybe one quick and somewhat aggressive offer by someone who wants to avoid a bidding war.
I don’t know ...if you think the house is worth 675 and will get bid up to 675....
It makes more sense to me to list it at 675 than it does to list it at 625 and hope.
Buyers are shopping in a price range that fits their budget. When they find the house they want they make an offer. A lot of them aren’t interested in playing bidding games, blindly bidding up over list against invisible other buyers they are told are out there. I’ve had a lot of very qualified buyers reject that outright - they say “we aren’t going to play that game.” And they find another house.
But I’m not your mega agent who’s got a strategy… If he’s your guy listen to him :-)
Last edited by Diana Holbrook; 08-02-2019 at 11:38 AM..
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