A guest post at Where Does All My Money Go? described a strategy for selling your home where you offer a low price in an attempt to create a bidding war. This type of strategy may or may not help the homeowner get a better price, but it will definitely help the real estate agent.
In a nutshell, the strategy is to price a home at the bottom end of a reasonable price range and advise buyers that all offers will be reviewed on a particular day less than a week away. The hope is to generate a lot of interest quickly and create a bidding war that takes the price up to the top end of the price range. Note that this is likely to create a fast sale.
Real estate agents benefit most from fast sales rather than higher selling prices. Higher selling prices increase commissions a little, but faster sales lead to more sales and this helps agents a lot.
In almost all scenarios, this low-ball strategy helps the agent. If it works as planned, the house is sold quickly, and both seller and agent win. If only one offer comes in at the asked-for price, the seller must either accept the low offer or pay the agent’s commission. Either way, the agent gets paid. If no offers come in, then there wouldn’t have been any offers at a higher price anyway, and the agent can focus efforts on new opportunities instead of wasting much more time on this house.
Some might argue that agents would only try this if it is in the best interests of the seller. For this to be true, the agent has to be both competent and honest. I’m sure this is true in some cases, and I’m also sure that it is false in some cases. Overall, I would be very wary if a real estate agent suggested this strategy to me.