There are truly 3 home pricing "strategies" used in modern day real estate: pricing under value, at value, or over value. In this video, I go over these strategies and breakdown what WILL happen along with WHAT could happen.

The Home Pricing Strategy: Why Some Homes Sit While Others Sell Instantly

You drive past a house on your way to work. The sign just went up. You think to yourself, “That home is going to sell fast.”

Three months later… the sign is still there.

From the outside, it doesn’t make sense. The home looks fine. The yard is maintained. Nothing appears obviously wrong. So what happened?

Most of the time, it comes down to pricing — not paint colors, weird tile, or questionable basement storage choices.

Let’s break down the three most common home pricing strategies, when they work, when they don’t, and how they impact real-world results.

The Three Home Pricing Strategies

When it comes to selling a home, there are only three pricing approaches:

• Pricing under market value
• Pricing at market value
• Pricing over market value

Each strategy has a time and place — but only when used intentionally and with a clear understanding of the market.

Pricing a Home Under Market Value

At first glance, pricing under value sounds counterintuitive. Most sellers understandably want to get the highest possible price.

But there are situations where underpricing is not only effective — it’s strategic.

This approach is commonly used when:

• A seller needs to move quickly
• The home is being sold as-is
• The home was recently renovated
• Inventory is low and demand is high
• The market strongly favors sellers

The goal of underpricing is attention.

Lower pricing increases showings, creates urgency, and often leads to competitive offers. When multiple buyers are interested at once, they tend to focus less on “getting a deal” and more on winning the home.

This is where bidding wars come into play.

How Competitive Offers Actually Work

When strong interest builds quickly, an agent may set a deadline for “highest and best” offers. Buyers are then encouraged to submit their strongest possible terms.

But price isn’t the only thing that matters.

There are five major components of an offer that sellers evaluate:

Contingencies

A contingency gives a buyer a legal way to exit the contract under certain conditions.

Common contingencies include:

• Home inspection
• Sale of the buyer’s current home
• Financing approval

Fewer contingencies generally mean less risk for the seller.

Escalation Clauses

An escalation clause allows a buyer to automatically outbid competing offers up to a specified limit.

In competitive situations, escalation clauses can dramatically drive prices upward — especially when a home is underpriced intentionally.

Home Inspection Terms

Some buyers waive inspections entirely or limit inspection requests to major safety issues.

Why does this matter?

According to the National Association of Realtors, roughly 20% of closing delays are related to inspections. Fewer inspection hurdles often mean a smoother, faster transaction.

Possession Timing

Possession can make or break a deal.

A buyer may want extra time after closing, while a seller may need proceeds immediately to purchase another home. Even a strong price can lose appeal if timing doesn’t align.

Cash vs. Financing

Cash offers remove two major hurdles:

• Mortgage approval
• Appraisal requirements

That’s why sellers often favor cash or strong conventional financing with large down payments and appraisal waivers.

When Underpricing Does NOT Work

Underpricing isn’t always the right move.

This strategy tends to fail when:

• Inventory is high and buyers have options
• Home values are declining
• The price is too far below market value, raising red flags

If something looks “too good to be true,” buyers may assume there’s a hidden problem and move on entirely.

Pricing a Home at Market Value

Pricing at market value is the most balanced and commonly used strategy.

This approach typically results in:

• Steady showing activity
• Fewer bidding wars
• A slightly longer time on market
• Offers closer to list price

If there’s no urgency to sell, this can be an excellent strategy — especially in neutral or shifting markets.

Pricing a Home Over Market Value

Overpricing is not really a strategy — it’s usually an emotional decision.

Sellers often overprice because:

• They’re emotionally attached to the home
• They believe upgrades justify a premium
• They were promised a high number by an agent
• They assume buyers will “negotiate down”

Unfortunately, overpricing often leads to less exposure, longer days on market, and lower final sale prices.

Signs Your Home Is Overpriced

Common indicators include:

• Very few online views or showings
• Showings without offers
• Above-average days on market
• Offers well below list price
• Nearby homes selling for less in better condition

Over time, buyers stop seeing the home as “new” and begin asking why it hasn’t sold.

What to Do If a Home Is Overpriced

If the market responds poorly, adjustments matter.

First, pay attention to price filters. Buyers search in round numbers. Pricing at $219,999 instead of $220,000 can actually exclude your home from search results.

Second, consider a price improvement. A well-timed price adjustment paired with renewed marketing or an open house can reignite interest.

Third, explore buyer incentives, such as:

• Closing cost assistance
• Repair credits
• Home warranties
• Flexible possession
• Enhanced agent compensation

When marketed properly, incentives can reposition a listing without chasing the market downward.

Why Pricing Is the Most Important Part of Selling a Home

Pricing sets the tone for the entire sale.

It determines:

• Who sees the home
• How buyers perceive value
• Whether competition exists
• How much leverage a seller has

That’s why working with a knowledgeable real estate professional — someone who understands local market conditions, buyer behavior, and pricing psychology — matters more than almost anything else.

If you’re a homeowner in Michigan and want a data-driven comparable market analysis, I’m happy to help you understand where your home truly fits in today’s market.