The Bidding War Myth: Why Winning Isn’t a Guessing Game
The word “bidding war” conjures up images of frantic buyers, emotional offers, and houses selling for ridiculous, over-the-top prices. It’s often portrayed as a stressful, unpredictable lottery where the winner is simply the one who got lucky or was willing to overpay the most.
But what if I told you that’s all a myth?
The truth is, a bidding war is not a guessing game at all. It’s a calculated outcome of a specific marketing strategy, and the buyers who consistently win are the ones who understand this crucial distinction.
The Art of Strategic Under-Pricing
The biggest secret sellers and their agents will tell you (if you ask) is that they are purposely pricing low to attract multiple offers.
In a competitive market, the list price is not a true reflection of the home’s value. It’s a marketing tool — a piece of bait designed to cast a wide net and get as many interested parties as possible to the table. By setting a price slightly below what the home is actually worth, the seller creates a sense of urgency and competition, guaranteeing a frenzy of showings and, hopefully, multiple offers.
In most cases, a seller who has received multiple offers would never, ever accept an offer at the asking price.
Think of it this way: Imagine a brand-new, luxury car with a sticker price of $50,000. Now, imagine the same car being advertised for just $1. Would you walk onto the lot, slap a dollar bill on the hood, and expect to drive away? Of course not. You’d understand that the $1 is simply a starting point to get you to the negotiation table.
Real estate works the same way. The list price is a starting line, not the finish line.
Houses Don’t Go “Way Above Market Value”
This is perhaps the biggest misconception in real estate. When a house listed for $699,000 sells for $850,000, it’s easy to assume the buyer “overpaid” by $151,000. But that’s not what happened.
The reality is, the house was likely worth close to $850,000 all along. The agent’s strategic pricing simply made the final sale price seem like a massive leap. The winning bid is often very close to the true market value, not “way above” it.
This is where the educated buyer and their agent shine.
The Educated Buyer’s Winning Strategy
The buyers who win bidding wars aren’t the ones who throw out a Hail Mary offer based on a gut feeling. They are the ones who have done their homework.
Their process looks like this:
They start with a valuation, not the list price. They and their agent perform a thorough comparative market analysis (CMA) of similar homes that have recently sold in the area. This gives them a clear picture of what the house is actually worth.
They set a firm “walk-away” price. Based on their analysis, they decide on the absolute maximum they are willing to pay before they even write the offer. This removes the emotion from the equation and prevents them from getting swept up in the heat of the moment.
Their offer is based on value, not emotion. The winning offer is often not just the highest number. It’s the highest number that the buyer believes the house is worth. They are bidding on value, not on a random number above the list price.
Believe it or not, a prepared buyer can even get a good deal on a house in a multiple-offer situation. Sometimes, the winning bid might be just shy of what the house is actually worth, or it could be so attractive in other ways (e.g., firm offer, quick closing) that it wins over a slightly higher but conditional bid.
The moral of the story? Bidding wars are a predictable outcome of a savvy marketing strategy. The true power lies not in being the highest bidder, but in being the most educated one. By focusing on a home’s actual value rather than its list price, you’re not playing a guessing game — you’re executing a winning strategy.
