Intentionally low prices for houses lead to overbidding, research shows

Houses in the Netherlands are increasingly being sold above the asking price. In the third quarter of 2024, almost three-quarters of the houses sold were offered above the asking price, reports Huispedia. According to the online housing platform, this is because houses are deliberately being offered too low to trigger a bidding war.

“We are noticing that houses are increasingly being offered at low prices,” says Maxim Bours, CEO of Huispedia. In the past quarter, more than half of the houses were offered for sale with an asking price that was too low. According to Bours, an asking price that is too low attracts the interest of more buyers, and a bidding war is then triggered within this group. In his opinion, this has a price-driving effect and further fuels the craziness in the housing market.

According to Bours, a low asking price is such a successful sales strategy because the bidding process is not regulated: “Bidding on a house does not follow a watertight bidding process. Due to the 'low on the market' strategy, viewings are teeming with competitors bidding. Then the bids are passed on, and to everyone's surprise, all these buyers are asked to bid higher. Of course, this only increases the pressure and frustration.”

The figures from Huispedia show that not only are bids higher, but they are also more frequent. In the third quarter of 2024 alone, almost three-quarters (71.5%) of the houses sold were outbid.

The solution, according to Bours, is to regulate the bidding process. “Do you want to take the biggest madness out of the housing market? Then make sure that this strategy no longer works: Prevent bids from being passed on to each other and ensure that no further bidding rounds can be started. Only then will you stop the intermediary influence, take the madness out of the market, and create a fair housing market.”

In 2021, the then Minister of the Interior, Kajsa Ollongren, tried to tackle this problem with a bidding protocol, but this did not solve the problem of intermediary influence, Bours says. Huispedia is calling on the Minister of Housing and Spatial Planning, Mona Keijzer, to critically review the tendering process and curb the influence of middlemen.

Meanwhile, Bours advises buyers to look critically at asking prices: "Check whether the price is reasonable. If the property is priced low, be prepared for a possible higher bid."