Every time a property comes on the market that fits my client’s criteria with a $1 list price, I invariably get the email or phone call asking about it. Most times the questions start with “what is wrong with the property? Why is it selling for $1?”
Then begins the conversation about how it is not really selling for $1. You as a buyer can offer $1 but the seller will not accept it. So why do they put that as the list price? The short answer is just for the attention.
Usually when you see a property with a $1 list price it has been on the market for a long period of time without selling. The list agent at some point cancels the listing and relists it for $1. What they are doing is trying to get your attention and trying to get an offer – any offer – on the table. Whenever I see a listing for $1 I always envision a frustrate agent with frustrated sellers who throw their arms in the air and scream, “Well you tell me what it is worth then!” They are hoping that a buyer will come forward with what they believe is their best offer and that they can begin the negotiation process.
Do not get this method confused with an agent’s attempt to start competition. Sometimes an agent will list a property well below what they believe is the market value and “hold off offers” until a certain day. This means they list the property for a great deal, and then will not look at any offers until a set day usually a week or so later. This gives a chance for as many agents and buyers as possible to get in and see the property, while not pressuring the seller to choose from the first one or two offers that come in. The listing agent and seller than hope that on the designated day several offers will come in, each competing to win the property. This frequently leads to better offers with higher dollar values and fewer conditions.
In comparison, the $1 listing is hoping for any offer to come in at any time. The seller and listing agent have a price in mind that they are willing to accept and if your price matches theirs, then they accept. If not they will begin negotiating and try to find a price that both sides can agree to. Does the $1 list price lead to competition? Sometimes, but not nearly as frequently as other strategies. Does the $1 list price work? It definitely grabs attention, but that does not mean it sells the house. As mentioned earlier, the first question I hear from my clients who might be interested is “What is wrong with the house?” Is that how you want to introduce people to your property?
Working with a realtor who knows how to properly and effectively market your house is the best way to get it noticed and get it sold. Working with a realtor who can explain the differences between these strategies ensures that as a buyer you are making an educated decision on what is most likely one of the largest investments you will make in your lifetime.
If you have any questions about a $1 list price or other strategies, please contact Ryan Ligeza. I look forward to hearing from you.