Don’t Let a Low List Price Distract You in a Bidding War

How to Beat the Competition in a Frantic Real Estate Market

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When you’re in the market to purchase a home, finding yourself in a bidding war can be stressful. One scenario buyers often encounter is a listing priced well below what they believe the home’s true value to be. It’s tempting to question whether the property is worth escalating your offer well beyond the list price, but it’s important to keep a few things in mind when navigating these situations.

The Psychology Behind Low List Prices
Sellers, with the guidance of their listing agents, sometimes price homes below market value intentionally to attract a larger pool of buyers and create competition. This tactic is designed to generate buzz, multiple offers, and potentially drive up the price in a bidding war. While the list price might seem like a bargain, it doesn’t always reflect the home’s actual value.

If you’re hesitant to go significantly above the list price because you feel anchored by it, you could be missing out on a great opportunity. A well-priced home in a competitive market can easily sell for much more than its list price, especially if comparable homes in the area justify the higher offer.

Use Comparable Sales to Your Advantage
Before getting too caught up in the list price, take a step back and look at recent comparable sales in the neighborhood. These “comps” are key to determining the true market value of the home. Are homes with similar features, square footage, and location selling for much higher? If so, this is a strong indicator that the low list price is merely a strategic move and not an accurate reflection of the property’s worth.

When comps support a higher price, don’t hesitate to submit an offer that reflects the home’s true value. It can feel counterintuitive to bid $50,000 or $100,000 over list price, but if comparable sales justify that number, you’re still making a sound investment.

The Risks of Playing It Safe
In a bidding war, playing it safe with a low offer could leave you empty-handed. In competitive markets, homes often sell well above list price—sometimes within days or even hours of hitting the market. If the comparables point to a higher value, making an aggressive offer may be your best chance of winning.

Additionally, even if your offer goes beyond what the home is listed for, you could still end up paying less than what future buyers would. As home values continue to appreciate, today’s escalated price may seem like a great deal in a year or two.

Balancing Emotion and Logic
It’s easy to get emotionally caught up in the whirlwind of a bidding war, but staying grounded in logic is essential. Use the data at your disposal—comparable sales, current market conditions, and advice from your real estate agent—to guide your decisions. Your goal is to secure the home without overpaying, but it’s crucial not to let an artificially low list price prevent you from making a competitive offer.

When faced with a bidding war, don’t let the list price deter you from offering what the home is truly worth. If comparable homes support a much higher value, trust the data and make an offer that reflects that, even if it means going significantly above the list price. A well-researched, competitive offer can be the key to securing your dream home in a tight market.