I have seen many listing agents start out listing properties at below market value and then use the resulting flurry of buyer interest to spark bidding wars.
While this practice benefits the seller, and the listing agent would not be doing their job if they did not try to get the highest price possible for their sellers, buyers need to remember that this strategy only works when more than one buyer takes the bait.
Here are 4 things buyers should bear in mind about bait-and-switch tactics in real estate:
1. Remember, demand creates value, which increases prices. The opposite is also true. When demand goes down, so do prices.
By engaging in bidding wars, you are driving prices up.
2. If you want to find a truly great deal, then you most certainly do not want to render yourself a tool for sparking a bidding war.
Instead, find out the motivation of the seller. If seller or their agent appears evasive, take note, give them the benefit of the doubt once, and then move on if it appears that you cannot get straight answers. This is a red flag.
3. If you engage in the game of bait-and-switch, then be prepared to waste some time.
It is no wonder many investors prefer to look at unlisted properties, and save listed properties as a last resort.
4. Wise investors avoid bait-and-switch pricing games. They realize that there are too many good deals out there to allow themselves to be used as leverage in the ploy to get the highest price possible.
Smart investors do not get emotionally attached to properties. Emotions are the hooks that make pricing games work so well. Eliminate emotions from the equation and pricing games are no longer as effective.