Bidding War Exhaustion: Sellers Don’t Underprice!

More and more I am seeing the technique of purposefully underpricing a listing in order to create an artificial bidding war. It is a very tempting pitch from your listing agent, but don’t fall for it! They may want you to underprice in order to sell your home quickly and to move on. Their goal might not be to net you the highest amount. And it doesn’t work, in my opinion.

Example (ass described in the video)

Listing 1, our listing. $429,000, sold for  $432,600 or 101% of list.

Listing 2, not ours. $399,000, sold for $433,000 or 108% of list

One might initially think listing 2 did better. However, #2 was listed a month after #1 went Under Contract fast (so they should know that it went near full price, and newer listings in an up market tend to ask for about $2,500  more). Listing #2 was nearly identical, but two floors higher plus a fireplace. Two floors is about $6,000 in value, a fireplace, maybe $2k. Yet they only got $400 more on a place worth $8,000 more. The result of underpricing to create a bidding war… a loss of $7,600-$10,000 in value. Oops!

Why doesn’t it work? Bidding War Exhaustion ™,is what I call it (see Video at minute 4) . Buyers have a mental block for going over a certain % above list. Even though I frequently tell buyers to ignore the list price. Why take guidance from the listing agent who might not have a clue about the area.

IGNORE LIST PRICE! (sometimes)
I would rather you bid up a place $10k over list on $20k underpriced home then bid down $50k on a home that is overpriced by $80k. And for those of you that say “Oh no way man, I’m not getting involved in a bidding war” you REALLY need to talk to me. If you don’t want to buy this year because you think it is a bubble 2.0, that is fine, I wont argue (don’t miss the blog post “Lose $40,000” the moment you buy a $500k home).

But if you are going to buy in the near future, that approach may cost you money. What, you are going to do? Wait until the NEXT house hits for $10k OVER the post bidding war price of the one you lost? Well that one will get bid up too, and you might be $25k worse off.

More buyer DC area bidding war tips here including one crucial tip only supplied if you email me directly, or via a comment.


– Don’t overprice and allow for wiggle room. You will end up with a stale listing, low ballers and price drops into an endless pit.
– Don’t underprice. A bidding war might work, but I don’t believe you will get higher than if you priced properly and went up from there. Also underpriced homes really tick off buyers and the agent, and you don’t want a ticked off buyer on the other side of the table. Forcing people to buy, rarely works (but was necessary when I got a properly priced $499k place bid up to $601k in the Bubble 1.0).

– It almost always takes at least 2 buyers to sell a home. One to low ball and one to get the other off the fence.

– Don’t believe ads that guarantee a bidding war or show stats that on their face might seem impressive. When in doubt, send them to me. If it is the real deal, I will tell you and probably recommend you go with them!

(more bidding war tips for sellers and a video here)

Thanks! Don’t forget to subscribe to this blog (upper right corner of and get sneakpeaks on future blogs by watching and subscribing to I now tend to start with a video blog and follow with a written post.

And comment! The last post got tons of direct emails. Instead ask your questions here and your comments. Even if there are short. A blogger loves a conversation.

Written ghostwriter-free by: Frank LLosa Esq. who is never too busy for you, just email me.

Principal Broker for

Attorney at Law, only in NJ and the above is not legal advice, in part because you didn’t pay me.

p.s. Anybody want to see me make a horrible attempt at a real estate rap video? Stay tuned.

  • 28
  • March
  • 2013

7 Responses to “Bidding War Exhaustion: Sellers Don’t Underprice!”

  1. It would be interesting to see a side-by-side case study (perhaps the topic for another blog) where two similar properties (in size, appeal, neighborhood, etc) were listed within the same three-month period and sold for different prices ….

  2. says:

    It is in the video, an exact example like that. I will move it to the blog post itself.

  3. You’re right …. I was multi-tasking the first time through.

  4. “Don’t overprice and allow for wiggle room. You will end up with a stale listing, low ballers and price drops into an endless pit.” I am always dealing with this with seller clients… scared to put the real value as the list price… these days though pricing and condition/staging are the two of the MOST important marketing aspects (along with photography as a third)… mess up on either and your chip away at your net no matter what.

  5. hunter123 says:

    As a buyer and a contracting officer (not in real estate) I always believe in a best value decision. It may be that I pay more to get something or I find that it is not worth the money. I recently put in an offer at 9% below list price on REO. I have watched this specific neighborhood for the last 4 years and this houses price was at the top of the neighborhood sold houses. The few houses that sold for that high and were move in ready. This need carpet, some holes and damaged walls, painting, looks like the agent put in appliances (its 40000 sqft). I was hoping the bank would come back and negotiate. The real estate agent said at the time we went and looked at the house there were no offers. Then when I put my offer in she told my agent she got one other offer. Of course they asked for highest and best. I did not want to go higher because as we know price is only one negotiation factor in a best value decision, you may look at terms (ie increase price but change the terms). To just increase price you loose negotiation standing. I confirmed to my agent to resubmit my offer as highest and best. Well the bank accepted no offer. Still active on market. But, I always go by what my mama has always said, you may pass/loss that deal but always something better will come. I have found that every house I did not get a better one has always came up. I plan to wait 30 days and then put another offer in if not under contract.

    I dont know if I would ignore the list price, isnt it based on BPO? I would compare that price with the comps and come up with a range. Does the list price fall within the range. Are the comp houses in the same condition. (REO usually are lower because they have work to bring it up to the market).

    I dont know if waiting cost me money. Like I said mama always said when something leaves, something better will take its place. For every house I thought I wanted. A better one always came by. It might have been a little more expensive, but its a best value decision not a low price decision.

  6. says:

    Thanks for your comment Hunter. I might agree with you, but this discussion is regarding bidding wars. If you are up against 5 people and are dying to get into a neighborhood… sure you can pass on this one, and the next one might be better, but it will cost significantly more.

  7. Steve says:

    Typo…or maybe not? See “ass”:

    “Example (ass described in the video)”

    (I’m only writing this because your other blog posts ask to “report typos” )

Leave a Reply