What Shows a Home Is Likely Priced Below Market on Purpose: Ask a Wahi REALTOR®

If a home price seems too good to be true, it probably is. Here are some of the tell-tale signs that a listing is being intentionally undervalued.

By Josh Sherman | 2 minute read

It’s an all-too-common experience, especially for first-time homebuyers. You think you’ve found your dream home, and it’s listed for a price that’s far lower than you expected to pay, so you rush to put in an offer.

But so do several others who have been enticed by the price.

A bidding war begins, and, in the end, the property sells for hundreds of thousands of dollars more than asking.

This scenario is a regular outcome when a seller has chosen to intentionally list their home below market value. “The purpose of listing below market is to drum up interest in the property and hopefully generate more than one offer,” explains Anne Alkok, Wahi’s Broker of Record.

To help eager homebuyers avoid this potential heartbreak and make better-informed decisions, Wahi Broker of Record Anne Alkok provides some tell-tale signs that a home is likely priced below market on purpose.

1. The home has been on the market for a long time

If a home has been sitting on the market for a long time, the Realtor might decide to low-ball the price on behalf of the seller. Wahi users have access to a huge amount of data, including previous sold prices as well as a home’s listing history. If a home has been available for much longer than the local average days on market (a reflection of how long properties typically stay listed before selling), then the price may be too good to be true. 

2. Comparable properties have recently sold for considerably more 

Look at properties with similar characteristics — such as the specific housing type, square footage, and the number of bedrooms and bathrooms — that have sold in the past few months. Did they sell for much more than the list price of the property you’re eyeing? If so, that’s another indication the home may be undervalued.

3. The price has been reduced more than once

If a home’s list price has been adjusted downwards multiple times, it could be a sign that the property is currently undervalued. Of course, this could also mean that the home was not realistically priced to begin with and has been adjusted to align more with the true market value. For example, in recent years, the Greater Toronto Area neighbourhood of Eastlake has seen a higher-than-usual share of homes change hands for below asking price. This hyper-local trend has been attributed to the fact that the neighbourhood has many new, custom-built homes. A lack of relevant comparables in the area can make these properties difficult to price at the onset.

4. Wahi’s Home Value Estimator says it’s undervalued

Each listing on Wahi features a unique home-value estimate. Wahi’s Home Value Estimator gives house hunters a free estimate of a home’s estimated market value — with up to 90% accuracy. You can also use the tool to receive an estimate of your own home’s value.

Wahi’s Home Value Estimator takes several factors into account, including taxes, the size of both the lot and home, number of bedrooms, and more. Learn more about the factors that affect a home’s value, and try the tool out for yourself.

5. The housing market is cooler  

With fewer buyers around, some Realtors may choose to list below market to fuel interest. However, Alkok notes, this strategy isn’t without risk, and one shouldn’t assume a home is priced too low just because cooler conditions are prevailing. “​​In a slow market, listing below market value is risky as you may get an offer but may not be able to achieve market value,” she says.