So, for example, if there are 8 properties on the market...$400,000, $405,000, $410,000, $412,000, $414,000, $416,000, $418,000, and $420,000...and recently sold houses suggest a comp of around $410,000, you probably should be priced between $405,000 and $409,000. That should sell your home reasonably quickly without leaving much money on the table.
If you underprice your home--in the example above, let's say $395,000--yes, it's likely to sell quickly (in comparison to the others on the market). But even if you get multiple offers, are you leaving money on the table. Let's suppose someone offers nearly full price--$393,000. Someone offers full price--$395,000. And someone actually offers more than full price--$398,000. Great. You've got multiple offers, including at least one above your asking price. Still, you end up with $398,000 when you probably could have gotten $405,000.
Every situation is different, and I've obviously oversimplified here. And it's always a trade-off between rapidity of sale and maximizing your net. But, in general, I wouldn't advise significantly underpricing a property in hopes that multiple offers will end up giving you as much as if you'd priced your property initially.
Hope that helps.
It's best to underprice, get a lot of action in the critical first 30 days, and then -- give prospective buyers notice that they are in a bidding war with other buyers. It is ironic that underpricing often works best to get the highest final price, but due to market and sales dynamics, it's often works wonders.
All it comes down to is you want to be the first house sold when you say it's for sale. Two factors will make that happen and they are intrinsically related. The apperance of the property from the curb to the backyard need to show value with the listed price. The deeper the value the more people will come to see it. More people see it chances are increased on more people wanting it and more people wanting it equals more offers. More offers means competition and the opportunity to negotiate to the highest possible price.
It works and has worked for centuries in all kinds of markets. Create noise around the product in the bazar and the excitement will carry a buyer to the heights of deisre.
Market positioning is very important in todays market. A sense of value will generate the most interest from the pool of buyers.
Consult with your real estate professional a develop a strategy that will create the excitment and drama that makes your home the best on the market.
More than likely you will have a flock of qualified buyers looking at your home and perhaps one or two who will make an offer almost immediately.
This has been the experience in my market place.
Best of luck!