Real estate agents have a fiduciary responsibility to act in their clients’ best interests and help sellers achieve the highest possible value for their homes. Given that responsibility, why might an agent recommend listing a property below its perceived market value?

Research and real-world experience have shown that strategic pricing can increase buyer interest and attract a larger pool of potential purchasers. Multiple offers can drive the final sale price above the asking price and, in some cases, beyond what the seller anticipated.

This approach tends to be most effective in markets where buyer demand exceeds the available supply of homes. When buyers perceive a property as offering exceptional value, they are often motivated to act quickly and make stronger offers. This was a great strategy in 2021 and 2022 when we knew we had buyers chomping at the bit waiting for the next house to buy before interest rates were projected to climb over 3.5%. Prices increased in value 26.5% from 2021 to 2022 in Hopkinton.

Today’s market is different. Higher mortgage interest rates at 6-6.5% have reduced affordability for many buyers while inventory levels have risen. Buyers now have more time to evaluate their options, taking a more cautious, wait-and-see approach. In this market, pricing a home significantly below value may not create the same level of urgency that sellers experienced just a few years ago.

It’s a buyer’s market. Underpricing a home in this market is not shown to be as effective to achieve or surpass market value as it was in the previous seller’s market. For example, pricing a home $100,000 below its market value may attract additional attention and increase the number of showings, but the important question is whether buyer demand is strong enough to bring the final sale price back to and surpass comparable sales.

When buyer demand softens, a home usually sells closer to its list price rather than being driven upward through competing offers. In some situations, underpricing can result in a lower sale price than a seller might have achieved by listing at market value.

The importance of accurate pricing has been highlighted by industry experts. National Association of Realtors chief economist Lawrence Yun has emphasized that underpricing too aggressively can be counterproductive and a mistake if it’s done without regard to supply-demand dynamics and long-term market trends. Instead, sellers should aim for strategic, data-driven pricing that reflects both current buyer demand and the potential for future appreciation.

Every home, neighborhood and market is unique. The key is working with an experienced real estate professional who understands local market conditions and can develop a pricing strategy tailored to the seller’s goals. Choose an agent you trust, someone who will negotiate effectively on your behalf and help position your home to achieve the best possible outcome.

Kim Foemmel
Foemmel Fine Homes
1 Lumber Street, Suite 207C
Hopkinton, MA
(508) 808-1149
Kim.Foemmel@gmail.com
FoemmelFineHomes.com

The advertiser is solely responsible for the content of this column, which is a paid advertisement.