If your visibility and marketing are excellent, perhaps — but don’t count on it.

Key Takeaways

• An underpriced home in a healthy market may attract multiple offers that push the price higher — but only if visibility and exposure are excellent.
• Don’t underprice a listing if you don’t have great visibility and marketing — that’s leaving cash on the table for your seller.

If a market is healthy with a fair amount of demand from buyers, and you get multiple offers in the first day, does that mean you priced it right or too low?

Most agents experience this concern in some form or fashion. Often homeowners will ask their agent, “Did we underprice it? Could we have gotten more?”

The good news is that in a very strong market, pricing often self-corrects. Think about how an auction works. It starts off at a fraction of what it should sell for. By the end, there are usually a number of buyers pushing the price up higher than it should be.  

In a housing market that has a lot of buyers, the biggest danger for sellers is in overpricing rather than underpricing a listing (an important topic for another day).

Underpricing most often leads to multiple offers on the property, which naturally push the price up — so long as you have good visibility so that everyone knows about it in time. If you don’t have good visibility on the home, then there is a strong possibility that the homeowner will net less on their home sale then they should.

Pricing a home correctly can be tricky and warrants more time investigating than most give to better your odds of getting it right.  

Agents must be careful. If you don’t have a strong marketing plan to enhance the visibility and presentation of the home prior to listing, and you drastically underprice it, then yes, you’re definitely leaving money on the table for your client.

I see this happen frequently. Recently I saw a home that should have been priced at $500,000, but was priced by the agent at $400,000, and it sold at $450,000 in a day. The sellers really lost out by hiring that agent, unfortunately. I’m not sure if the agent just didn’t do enough homework prior to listing it. They may have had a seller that wanted to sell quickly, but $400,000 for that home was way too low. I didn’t learn of it until after it was under contract. Had there been a big marketing push so that all local agents knew about this opportunity, I believe the sellers would have received something closer to the $500,000 amount.  

So the market doesn’t always self-correct, especially if visibility on the opportunity is mediocre. And when you’re talking about a hundred thousand dollars on the line, it’s worth the time and effort to make sure your pricing and visibility are exactly where they should be.