When It Actually Makes Sense to Underprice Your Home

Deliberately pricing your home below market sounds counterintuitive. Most sellers assume the goal is to list high and negotiate from there.

But there are specific situations where underpricing, done intentionally, results in a higher sale price than listing at market value. Here's when it works and when it doesn't.

When inventory is low and demand is strong

If you're in a pocket of Sherman Oaks or Studio City where inventory is tight and well-priced homes are going under contract in ten days with multiple offers, underpricing by five to eight percent can create a bidding situation that pushes the final price above where you would have landed with conventional pricing.

Buyers see a home that looks like good value relative to everything else available. Multiple buyers schedule showings. Several submit offers. The competition drives the price up.

I've seen this work particularly well on homes within the Carpenter Charter boundary or south of Ventura in Sherman Oaks, where buyer demand is consistently strong and inventory turns over quickly.

When your home is in excellent condition

Underpricing works best when the property justifies the attention it's going to get. If buyers walk through and immediately see why it's priced where it is, deferred maintenance, outdated interiors, an awkward layout, the strategy fails.

But if your home is well-presented, updated, and genuinely move-in ready, underpricing creates urgency. Buyers worry someone else will outbid them. They stretch on price because they don't want to lose it.

When you need a fast sale

If you're relocating, buying elsewhere, or simply want certainty over maximum price, underpricing is one of the most effective tools available. You'll generate showings immediately, likely have offers within the first week, and be in escrow before most conventionally priced listings even get serious interest.

The trade-off is that you're accepting some uncertainty in exchange for speed. For some sellers, that trade is absolutely worth it.

When it doesn't work

Underpricing doesn't create value out of nowhere. If your home has real issues, location, condition, layout, pricing it below market just signals that even the seller knows it's not worth market value.

It also doesn't work in a soft market where inventory is high and buyer demand is weak. If there are fifteen comparable homes sitting unsold, pricing yours below market won't create a bidding war. It'll just mean you sold for less.

And it doesn't work if your pricing is only marginally below market. Underpricing by two percent isn't enough to create urgency. If you're going to use this strategy, you need to be meaningfully below market, five to eight percent minimum, to generate the reaction you're looking for.

How to do it properly

If you're going to underprice intentionally, commit to it. Price it to create genuine interest when buyers see it. Make it the obvious best value in the neighbourhood for that week.

Market it heavily. You want as many buyers as possible to see it in the first few days. The more competition, the higher the final price.

Set a clear offer deadline. Offers reviewed Tuesday at 5pm forces buyers to make decisions quickly rather than waiting to see if the price drops further.

Be prepared for the outcome. Sometimes you get six offers, two of which are above your original target price. Sometimes you get three offers clustered around asking. You need to be comfortable with that possibility before you start.

If you're thinking about this strategy and want to talk through whether it makes sense for your situation, I'm happy to have that conversation.

Anj Catalano, The Agency  |  310.404.6955  |  hello@anjinla.com