Strategic Underpricing Creates Bidding Wars as Long Island Housing Market Shifts

Strategic underpricing has become the standard practice in Long Island’s real estate market, transforming asking prices into marketing tools rather than genuine indicators of what sellers expect to receive, according to local real estate professionals.

Jeffrey Memisha, a licensed sales associate at Realty Advisors Inc., says the gap between list prices and actual sale expectations has reached unprecedented levels. This shift particularly challenges first-time buyers who follow outdated advice from family members who purchased homes in previous decades.

“Sometimes we see clients who are first-time home buyers, and they have an uncle or parent who bought a house fifty years ago,” Memisha says. “That parent tells them not to offer the asking price. Then we work with these people, and they keep getting outbid and outbid on all the houses.”

The disconnect between traditional homebuying wisdom and current market realities routinely leaves inexperienced buyers at a disadvantage, according to Memisha. Many buyers continue to view asking prices as ceilings when sellers now commonly set them below their desired sale price to generate competitive bidding.

Sellers and their agents now deploy asking prices to attract interest and spark bidding wars rather than reflect minimum acceptable offers, according to Memisha. “The asking price is legitimately the price that people want — a lot of the time right now, it’s just a marketing tool to get more people in the door and gain more traction and get that bidding war,” he says.

A persistent inventory shortage across Long Island enables these pricing strategies. When Memisha and his colleagues prepare market analyses, they frequently encounter limited comparable sales data that would typically guide pricing decisions.

“When we go on appointments, and we’re printing out comps and looking at other sales in the area, there’s maybe three or four comps that we can compare to,” Memisha explains. “Sometimes there’s one, sometimes there’s none.”

This scarcity of data points grants sellers unusual freedom in price setting, particularly those with distinctive properties. Owners of unique homes often select prices based on personal preference, and the market frequently meets their expectations, according to Memisha.

“A lot of these people, if they have something unique, they just pick a price that they want, and oftentimes they get it,” he says.

The pricing strategy shift creates significant obstacles for buyers new to the market or those relying on family guidance rooted in different market conditions. First-time buyers following advice from relatives often believe offering below asking price remains standard practice, leading to repeated disappointment in today’s competitive environment.

Memisha regularly observes buyers anchored in outdated assumptions submit conservative offers, only to lose properties to more aggressive bidders. The information gap proves most pronounced among buyers lacking recent market experience or professional guidance, leaving them unprepared for modern homebuying realities on Long Island.

The current landscape of limited inventory and sparse comparable sales data makes establishing clear pricing benchmarks difficult. This uncertainty provides sellers and their agents flexibility to experiment with pricing tactics, knowing buyers have few reference points for comparison.

Memisha notes this environment represents a recent development. Even several years ago, more robust sales data enabled clearer price setting practices. Now, with fewer homes changing hands, agents increasingly use listing prices to generate interest rather than communicate seller expectations.

The strategic underpricing trend reflects broader changes in Long Island’s housing market, where traditional pricing models have given way to tactics designed to maximize seller leverage in a supply-constrained environment. For buyers, particularly those entering the market for the first time, understanding these new dynamics has become essential for successful home purchases.