There are a few main reasons why a seller might list a house for $1. The most common reasons are:
To generate interest and create a bidding war
Listing a house for $1 gets a lot of attention from buyers. It creates excitement and interest in the property. This technique is used to start a bidding war between interested buyers who want to get a great deal on the home. The final sale price often ends up being well above the original $1 list price.
As a last resort before foreclosure
If a homeowner is struggling to make their mortgage payments and wants to avoid foreclosure, they may list the property for $1 as a last ditch effort to sell before the bank takes ownership. Even getting a small amount for the home is better than losing everything to foreclosure.
Pre-market listing
Some sellers will list a home for $1 when they are preparing to put it on the market but are not ready for full exposure yet. It gets the listing into the MLS system so agents and buyers see it, but the rock bottom price communicates that it is not truly active yet.
Distressed sale
When a property is in poor condition or the seller needs to unload it quickly, they may price it at $1 to attract buyers willing to take on a fixer-upper project. The low price reflects the amount of work needed.
As part of bankruptcy or tax sale
If a homeowner is declaring bankruptcy or the property is being sold as part of a tax sale, it may be listed for $1 so that it sells quickly. The lender or tax authority wants to get the property sold and recover whatever funds they can.
Reasons for a $1 List Price
There are five main reasons why a seller would list a property for the extremely low price of $1:
1. To Generate Interest and Start a Bidding War
Listing a house for $1 when the property is likely worth far more is a strategy to get maximum interest and attention from potential buyers. By pricing it so low, the listing will appear in searches for inexpensive properties. This brings in buyers who are seeking a great deal.
Once they view the home and realize it is worth far more than $1, they are likely to bid well over asking price to try and secure the deal. This kicks off a bidding war between multiple interested buyers who keep raising their offers higher and higher.
The end sales price ends up being much higher than $1. This tactic works best in housing markets where there is high demand and low inventory.
2. As a Last Resort Before Foreclosure
Some homeowners facing foreclosure will list their house for $1 when they have run out of options and need to sell before the bank seizes the property. By listing it so cheaply, they are trying to attract any buyer willing to purchase it even in as-is condition.
The owner has likely tried other methods like lowering the price and using real estate agents. The $1 list price is a final act of desperation when they have exhausted all other methods of selling prior to foreclosure. Even getting a small dollar amount is better than the bank taking the home and the owner ending up with nothing.
3. As a Pre-Market or Coming Soon Listing
Realtors sometimes use $1 listings as a way to get a property in the MLS system before it is fully ready to be marketed and shown. This “coming soon” technique builds anticipation and interest from buyers eager to view the home as soon as it is ready.
It also functions as a “pre-market” listing. It lets real estate agents showcase it to their clients so they can be the first to know about the upcoming property. By listing it at $1, it signals that while it is technically on the market, the home is not being fully shown and promoted yet.
4. For a Distressed or Fixer-Upper Sale
When a property is in poor physical condition, dated, or needs extensive repairs, sellers may list it for $1 to find buyers willing to take on a restoration project. This reflects that the home is being sold “as-is” and significant work is required.
Buyers interested in distressed homes or fixer-uppers seek out these rock bottom priced listings. They have the skills, time, and funds needed to redo things like electrical, plumbing, roofing, flooring, and more. By listing it at $1, the sellers find the buyers most qualified to take it on.
5. Related to Bankruptcy, Foreclosure, or Tax Sale
If a homeowner files bankruptcy or loses their home to foreclosure, the bank that takes ownership will likely list it for $1 simply to liquidate the property. The same goes for a municipality selling a home due to unpaid property taxes.
The goal is to sell it as quickly as possible, even if that means getting only a tiny amount for it. For banks and tax authorities, some money is better than paying to maintain a property they now own. A $1 list price speeds up the sales process.
Situations Where a $1 Listing Might Make Sense
While an unusual strategy, there are certain situations where listing a property for $1 as the opening price can be an effective technique:
The Seller Needs to Sell Quickly
If the owner is under tight time constraints and needs to sell their home rapidly, the $1 list price can create immediate interest and offers. This converts to a quick sale, which is the priority in this scenario.
| Situation | Reason for Quick Sale |
|---|---|
| Relocation for a new job | Need to move immediately |
| Facing foreclosure | Want to avoid foreclosure and need to sell fast |
| Major life event/change | Need funds from the sale for something like medical bills or divorce |
The Property Has Severe Problems
A house with major issues like water damage, mold, or foundation cracks will merit a $1 list price. This signals it is being sold “as-is” and extensive repairs are needed.
| Issue | Repairs Needed | Estimated Cost |
|---|---|---|
| Water damage | Replace drywall, insulation, carpets; mold remediation | $10,000 – $30,000 |
| Foundation cracks | Seal cracks, repair foundation walls | $10,000 – $20,000 |
| Major HVAC issues | New roof, electrical, plumbing | $20,000 – $60,000 |
The Seller Owes More than It’s Worth
Properties that are “underwater,” meaning the owner owes more than the value, may be listed for $1. This is a try at getting a quick sale to avoid further depreciation or foreclosure.
| Home Value | Amount Owed |
|---|---|
| $200,000 | $250,000 |
| $150,000 | $180,000 |
| $120,000 | $160,000 |
Comparable Homes Are Selling Above Asking Price
In a seller’s market where homes often sell for over asking price, a $1 list can maximize the sale price. Buyers expect to bid up and are drawn in by the potential deal.
| Original List Price | Sale Price | Over Asking Amount |
|---|---|---|
| $200,000 | $225,000 | $25,000 |
| $250,000 | $285,000 | $35,000 |
| $300,000 | $340,000 | $40,000 |
Disadvantages of Listing a House for $1
While listing a home for $1 can generate interest, there are some potential disadvantages to consider:
It Can Attract “Tire Kickers” Not Serious Buyers
The ultra-low list price may entice people who just want to view the property out of curiosity, even if they can’t afford to buy it. This can waste the seller’s time and disrupt their lives.
Serious Buyers May Question if There are Hidden Issues
Many buyers will wonder why the house is only $1. They may suspect there are major defects being concealed. Even if the home is fine, the $1 price can create doubt.
Appraisal Issues
Lenders require an appraisal to approve financing based on the home’s market value. Appraisers may be skeptical of such an low price. If they estimate the value at a higher amount, it could derail a buyer’s approval.
Perception That the Area is Weak
In some cases, people may view an ultra-low list price as a signal that the whole neighborhood is declining. This could deter buyers and actually hurt sales.
The Agent May Not Support the Strategy
Many real estate agents dislike $1 list prices. They know it actually indicates an active, qualified buyer is needed. Some may try to talk the seller out of it.
Key Considerations Before Listing a House for $1
Home sellers should think through these important factors before listing at the $1 opening price:
Ensure the Property is Priced Right
Even with a $1 list, the final sales price should still align with the market value. Be sure you are pricing appropriately for the condition, location and features.
Talk to Your Agent
Discuss the strategy thoroughly with your real estate agent before listing at $1. Make sure they will actively promote the home even with the low price.
Price it Right From the Start
If you start at $1 but then adjust to full market value, it looks like a desperate price cut. Price low only if you fully intend to sell close to $1.
Consider an Experience Clause
Add a clause that initial offers must be accompanied by a large earnest deposit to pre-qualify bidders.
Evaluate the Buyer Pool
Assess if there are sufficient qualified buyers for a bidding war. In a slow market, $1 may just sit.
Be Prepared for Issues
Know that a $1 list price can attract curiosity seekers. Be ready if people drop by expecting a fixer.
What to Do Once You List a House for $1
If you move forward with listing your house for $1, here are some next steps:
Market Aggressively
Use digital ads, open houses, signage and direct mail to promote the listing and generate excitement.
Get Agent Feedback
Stay in close contact with your agent to find out about buyer reactions and if any issues arise.
Anticipate Lots of Showings
Schedule time for potential buyers to view the home and get pre-approved for financing.
Field Multiple Offers
Vet all offers that come in. Negotiate strategically if you receive several bids over asking price.
Stand Firm on Price
Only consider serious offers that reflect the true market value, not just the$1 list price.
Case Studies of Successful $1 Listings
Here are some real-world examples of houses that sold for well above their $1 list prices:
4 Bedroom Home in Tampa, FL
– Originally listed for $259K
– Was on the market for 42 days with no offers
– Relisted at $1 and buyer demand exploded
– Sold for $177K after 72 offers
Luxury 8 Bedroom Mansion in Maryland
– On the market for a year at $4M with no takers
– Delisted then relisted at $1
– Created bidding war between investors & developers
– Sold for $2.2M
Outdated 3 Bedroom in San Francisco, CA
– Owners tried selling for two years from $549K down to $300K
– Delisted then put back on at $1 price point
– Had 20 offers after a week and sold for $501K
Rundown 5 Bedroom in Detroit, MI
– Previously listed for $85K but needed major repairs
– Relisted at $1 as a fixer-upper “as-is” property
– Sold for $57K to an investor who renovated it
Conclusion
Listing a house for $1 can be an risky pricing strategy, but also has the potential to maximize interest from buyers. Sellers need to carefully assess their motivations and target buyer pool before choosing this approach. If done in the right market conditions, it can lead to a bidding war and higher final sale price. However, the $1 list price can also deter some qualified buyers or create a false expectation of the home’s value. Homeowners should consider both the benefits and drawbacks when deciding if this non-traditional technique makes sense for their situation.
