Its all about quantity and impression.When people are buying a house, they get into some-what of a HEAT! Underpricing Your House drives that heath up. I would call it a hunter gatherer mind set.
Buyers are constantly on the hunt, and one thing that I’ve noticed is that even with me sending my clients updates daily on houses, with their criteria, they will still have the urge to go on realtor.ca, and hunt for properties that might not be in their best interest to look at.
While the public mls site is great in a buyer market, in this heated market, it is not a good thing. It allows buyers in “Heat” to do their own searches, and look at underpriced, sometimes outdated listing. Hold on right there if you think I’m saying buyers are not educated enough to know what they want. Buyers in this day and age, are the most educated they’ve ever been. In some cases they know more than the agents, and become very savvy and become like detectives.
So, why do agents under price houses? Its a physiological thing, people always want or try to obtain something that they may think they can get. Some people will look at a million dollar house, listed for half a million and say, today’s my lucky day, lets go look at that house and put an offer for half a million plus fifty thousand.
Underpricing your house will bring in bids, that may not even come close. In the stupid way our industry is setup, no bids can be disclosed, so other buyers only know how many bids there, and they have to beat those bids to get that house. Even if you under price your house too much, the market is in such a sellers market right now, that you can just say no to all of them, and take the property off the market and re-list higher.
My advice always to my buyers is to find out what the comparables are, to look at what is on the market, and to set a max bid based on that information.
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