There are a few agents who habitually "under price" their listings. The idea is to generate multiple offers and thereby receive an exceptionally high Offer. It doesn't always work. They may get more than one offer but the amount offered is sometimes not as large as the Vendor expected. This is a very risky strategy and not always in the best interest of the client. Our job as the professional Realtor is to counsel the Vendor to make sure they're aware of the potential downside. I'm not sure this is always done.
So what to do when this happens? One approach is to cancel the existing listing and relist the same property at a higher price. This sometimes works. Sometimes it does not.
Imagine how the buyer with the losing bid must feel. He/She and their agent spent many hours inspecting, investigating and researching the home and the neighbourhood etc. They then spent time drafting what they thought was a substantial offer, one that exceeded the asking price. Then, after the presentation, they learn from the listing agent that their offer didn't have a chance of being accepted. In fact, they often find out that none of the offers (all of which may have exceeded the asking price) were accepted. According to one of my clients, "this stinks!"
There's nothing in the rule book that says this can't be done. However, there are a few possible conclusions that one can draw from this scenario:
(a) the Vendor and/or agent are simply greedy, or
(b) the Agent hasn't learned how to price a property properly, or
(c) the disappointed Buyer may choose not to play this game next time, thus taking one potential offer off the table, or
(d) the new, higher listing price will delay the sale of this property, or
(e) the final sale price may be much less than what it would have been had it been listed properly in the first place.
I'll write soon about how I approach the pricing of a new listing.