Is pricing a home low, in hopes for a bidding war, a good idea?

When purposely pricing a home below the market value in hopes to attract multiple offers, then you agree to play the bidding war game. In a multiple offer situation, it can good for the seller, because people do tend to let emotions fly when they make a higher offer. And this leads to more money for the seller. However, with heightened emotions, there is also pain and then mistrust. Every buyer wants the house, and they are going to be mad when you have to tell them, I'm sorry your offer was beautiful and perfect, but not good enough and therefore REJECTED!

Let's say you have 6 buyers with offers... That's 5 that now are angry at someone. When the onion is peeled back, some will scrutinize if you used good faith in consideration with their offer. If the agent presented it in a timely manner. Did you pass any confidential information to other parties milking higher offers. Did you discriminate against a particular buyer. Even if none of this is true, the accusation itself, if pushed into a legal arena, is simply not worth the inconvenience. I have been around the block enough to see it get ugly too many times.

Let's look at it from another angle. Let's say you get your first offer. It's good. But another offer is on the way. Its better. You wait. The first buyer gets angry. "Why hasn't my offer been accepted?" The second buyer never produces, and the first buyer withdraws. While you waited, the first buyer kept looking. They know you didn't respect their offer, and just found it easier to work with another seller. The cliche is similar to dating. "There are plenty of other fish in the sea!" Thus is true with the 2008-2009 real estate market. You now have a house without an offer at all. A low priced home and no bidding war. Other buyers are looking at it and saying, what is wrong with that house? You can't raise the price now, the market expects if you don't sell that you will lower your price.

On many occasions, you will end up with exactly what you asked for. More offers, and you pick the best one. You have to price it perfect, and know how to pull offers from buyers. You have to know what to say, without saying too much. You have to earn their trust, and being willing to break it. And if you are a Realtor, and you want to be successful, you can't let others know your intentions. Buyers and other Realtors that end up with the short end of the stick, remember who put them there.

If you want to price it low for the intent to score a higher value, you have to be willing to take the risks.