Fake discounts are a common tactic used by estate agents to create a sense of urgency and attract potential buyers. Understanding pricing strategies is crucial for buyers to make informed decisions and avoid overpaying for a property. The asking price of a property can significantly impact its market value and attractiveness to buyers.
The Illusion of the “Huge Discount”
Imagine scrolling through your feed and seeing it: a sleek, modern condo in a prime location with a bright red banner screaming,
15% OFF—FOR THIS WEEK ONLY! ” or “PHP 500,000 PRICE DROP!
Your heart races. You start doing the mental math, thinking about the furniture you could buy with those savings or how much lower your monthly amortization would be. It feels like you’ve finally caught a break in a competitive market, and you’re tempted to call the agent before someone else grabs the “deal of a lifetime.”
But before you reach for your checkbook, take a deep breath. In real estate, that massive price cut is often more about theater than actual savings. This is a classic psychological tactic known as price anchoring. Here’s how it works:
- The seller initially sets a high “original” price to establish a mental anchor in your mind.
- Every subsequent price you see is compared against this inflated figure.
- The so-called “discounted” price then appears to be an incredible bargain.
- In reality, the discounted price may still be above the property’s true market value.
The main problem is a lack of transparency that can easily mislead buyers. Some developers or sellers use a “mark up to mark down” strategy, which involves:
- Raising the base price of a unit significantly just weeks before a promotional event.
- Slashing the price back down during the promotion to create a false sense of urgency.
- Making buyers feel like they are saving money when, in fact, they are paying the original intended price.
- Pressuring buyers with a fake deadline to encourage quick decisions.
Understanding this tactic can help you avoid falling for fake discounts and make more informed purchasing decisions.
How the Overpricing Trick Works in Real Estate
Understanding the mechanics of property pricing is essential for any serious investor. At its base, real estate marketing is built on the list price, which is the initial figure a developer or seller uses to introduce a property to the market. While you might assume this number is based strictly on a professional appraisal, it is often a strategic starting point designed to test the waters or anchor buyer expectations.
Pricing Psychology
The Mechanics of “Mark Up to Mark Down”
The overpricing trick is a carefully planned move. It starts months before a big sale event like a “grand launch” or “holiday sale.” Developers quietly raise the price of a property by 10% to 15% over a few months. Then, when the promotion begins, they offer a “limited-time” discount of 10%.
At first glance, it seems like a great deal. But in reality, the “discounted” price is actually higher than the original price from a few months ago. This tactic plays on buyers’ fear of missing out (FOMO), pushing them to sign a reservation agreement before they have time to properly check the market.
Under Pricing and Its Effects
Under-pricing a property is a strategic pricing approach often employed to generate buzz and attract a large pool of potential buyers quickly. While this tactic can create a sense of urgency and stimulate multiple offers, it carries both benefits and risks that every buyer and seller should understand before engaging in the sale process.
The Appeal of Under-Pricing: Creating Urgency and Competition
One of the primary reasons sellers or listing agents choose to underprice a property is to ignite a bidding war. By setting the initial asking price slightly below the market value, the property becomes more attractive to many buyers, including serious buyers who are actively searching within that price range. This can lead to:
- Increased foot traffic and showings, as the property appears to be a great value.
- A higher likelihood of receiving multiple offers in a short period.
- The potential to sell faster than properties priced at or above market value.
- The possibility of achieving a final sale price that exceeds the original listing price due to competitive bidding.
This tactic leverages the psychological effect of scarcity and urgency, prompting buyers to act quickly to avoid missing out on a perceived bargain. In a seller’s market, where demand exceeds supply, under-pricing can be particularly effective in driving up the final sale price beyond expectations.
Risks and Drawbacks of Under-Pricing
Despite its advantages, under-pricing is not without significant risks. Buyers and sellers should be aware of the following potential downsides:
- Lower Sale Price Risk: If the property fails to generate enough interest or bidding activity, the sale price may end up below the property’s true market value, resulting in a financial loss for the seller.
- Missed Opportunities: Sellers might miss out on offers that exceed the property’s worth because buyers assume the low price reflects the property’s condition or desirability.
- Buyer Skepticism: Some buyers may be wary of under-priced listings, suspecting hidden defects or other issues that justify the low price.
- Market Misinterpretation: In a buyer’s market, under-pricing might not trigger the desired competition, leading to prolonged time on market and potential price reductions later, which can signal desperation.
- Emotional Attachment and Pricing Pressure: Sellers emotionally attached to their property may struggle with the idea of under-pricing, fearing they are “leaving money on the table.” This emotional factor can complicate pricing decisions and negotiations.
How Buyers Can Navigate Under-Priced Listings
For buyers, encountering an under-priced property requires careful evaluation and strategy:
- Conduct Thorough Market Research: Compare the listing price with recently sold prices of similar properties in the neighborhood to assess whether the under-pricing is a genuine opportunity or a red flag.
- Inspect the Property Carefully: Under-pricing may sometimes reflect underlying issues. A comprehensive inspection can reveal if the price aligns with the property’s condition.
- Set a Maximum Budget: Avoid getting caught in a bidding war that pushes the price beyond your financial comfort zone. Stick to a pre-determined limit.
- Request Verification of Competing Offers: If the listing agent claims multiple offers, ask for written proof to avoid being misled by fake offers or phantom bidding wars.
- Engage a Buyer’s Agent: A dedicated agent can help navigate the complexities of under-priced listings, negotiate effectively, and provide objective advice.
The Seller’s Perspective: Balancing Strategy and Expectations
Sellers considering under-pricing must weigh the potential benefits against the risks:
- Market Conditions Matter: In a seller’s market, under-pricing can create excitement and competition, often resulting in a sale price that exceeds expectations. In contrast, in a buyer’s market, it may backfire.
- Set Realistic Expectations: Understand that under-pricing is a calculated risk. Sellers should be prepared for the possibility of a lower-than-expected offer and have a plan in place to adjust their strategy if necessary.
- Transparency and Communication: Sellers should work closely with their listing agent to ensure the pricing strategy is clearly communicated and that buyers receive accurate information about the property’s value and condition.
- Timing and Marketing: Under-pricing is most effective when combined with strong marketing efforts and listing the property at a time that coincides with peak buyer activity.
Under-pricing is a strategic approach that can be highly effective in seller’s markets with strong demand, as it often sparks competition and can lead to a final sale price exceeding the initial listing. However, it carries risks such as the possibility of selling below market value and raising buyer suspicion. Both buyers and sellers should exercise due diligence through thorough market research, professional guidance, and careful evaluation to ensure pricing strategies align with their financial goals and avoid common pitfalls like fake discounts and overpricing tactics that can mislead buyers into overpaying.
The Role of List Price and Artificial Competition
The list price isn’t just a number; it is a psychological tool. Real estate agents and developers use specific pricing strategies to manipulate market perception:
- The “Low-Ball” Strategy: Setting a list price slightly below market value to spark a bidding war, which ultimately drives the final sale price far above what the property is worth.
- The “Premium” Anchor: Setting an intentionally high list price to make the property seem “exclusive,” then offering a “special VIP discount” to a select group of buyers to make them feel they are getting an insider deal.
- Fake Sense of Competition: Agents may claim that “only two units are left at this discounted price,” even when inventory is high. This creates a manufactured sense of urgency that prevents buyers from doing their due diligence.
Why Comparing is Your Best Defense
Failing to compare is the biggest mistake a buyer can make. If you don’t look at historical data or third-party listings, you are essentially flying blind.
Magkumpara Bago Bumili
Real estate agents are trained to create urgency, but a savvy buyer knows that a property’s true value is determined by what similar units are actually selling for in the current market—not by a crossed-out number on a brochure. By using platforms like HousingInteractive, you can see the “Price per SQM” of surrounding properties. If the “discounted” unit still has a higher price per square meter than its neighbors, the discount is likely a marketing illusion.
Comparing the “Trick” vs. Real Market Value
To visualize how this trick impacts your wallet, look at the table below. It compares a genuine market-value sale against a property using the overpricing trick.
| Feature | Honest Market Listing | The “Overpricing Trick” |
| Initial Market Value | ₱5,000,000 | ₱5,000,000 |
| Artificial Markup | None | + ₱750,000 (15%) |
| Advertised “List Price” | ₱5,000,000 | ₱5,750,000 |
| Promotional Discount | None | – ₱575,000 (10%) |
| Final “Sale” Price | ₱5,000,000 | ₱5,175,000 |
| Buyer Perception | Paid fair market price | Saved ₱575,000 |
| Actual Result | Fair Deal | Overpaid by ₱175,000 |
The Role of Real Estate Agents in Transactions
Real estate agents are pivotal players in the real estate market, acting as intermediaries between sellers and buyers. However, understanding their role, motivations, and potential tactics is essential for buyers to navigate the complex sale process effectively and avoid falling prey to common pitfalls such as fake discounts and overpricing tricks.
Primary Loyalty: Seller vs. Buyer
It is important to recognize that agents primarily owe their loyalty to the seller, as their commission typically depends on the final sale price of the property. This means that while agents are knowledgeable about market conditions and pricing strategies, their advice may be influenced by the seller’s interests rather than the buyer’s. Buyers should approach interactions with agents with a critical mindset, recognizing that:
- Agents may encourage buyers to make higher offers to maximize the seller’s profit—and their own commission.
- Some agents might downplay or omit information that could deter buyers, such as upcoming price reductions or known issues with the property.
- The agent’s business model incentivizes closing deals quickly, which can sometimes lead to pressure tactics.
Navigating Agent Tactics: What Buyers Should Watch For
Real estate agents can employ various tactics to accelerate sales or increase the final price. Awareness of these tactics helps buyers make informed decisions:
- Creating Artificial Competition: Agents may claim there are multiple offers or competing buyers to pressure a buyer into submitting a higher bid. According to industry reports, up to 80% of buyers suspect they are bidding against phantom offers.
- High-Pressure Sales Techniques: Tactics such as urging buyers to act “now or lose out” or suggesting a fake deadline for price promotions are common. These can lead to rushed decisions without adequate market research.
- Overvaluation and Price Adjustments: Listing agents may initially set an inflated asking price to anchor buyers’ expectations, then use price reductions to create the illusion of a bargain. This is known as the fake discounts overpricing trick, which can mislead buyers into thinking they are getting a deal when the final price is still above market value.
- Limited Transparency: Some agents might be reluctant to share full details about the property’s history, previous offers, or reasons for price changes. Buyers should insist on transparency and request documentation whenever possible.
The Value of a Good Buyer’s Agent
While the listing agent represents the seller’s interests, buyers can benefit greatly from engaging a dedicated buyer’s agent who acts solely on their behalf. A skilled buyer’s agent provides:
- Market Expertise: They conduct independent research on recent sales and current market conditions to advise on a fair offer price.
- Negotiation Skills: Experienced agents can negotiate effectively to secure the best deal, avoiding overpaying due to agent pressure or fake bidding wars.
- Due Diligence Assistance: They help coordinate inspections, verify the legitimacy of competing offers, and ensure all disclosures are accurate.
- Emotional Support: Buying a home is often an emotional journey. A buyer’s agent provides objective advice to keep decisions grounded in facts rather than impulse.
Tips for Buyers to Protect Themselves
To navigate the complexities of estate agent involvement and avoid being misled, buyers should:
- Do Your Own Research: Use online platforms to review sold prices of similar properties in the area. Don’t rely solely on the agent’s word.
- Ask for Proof: If told there are other bids, request written evidence or confirmation from the listing agent or the seller’s solicitor.
- Set a Firm Budget: Know your maximum price and avoid getting caught in bidding wars driven by artificial competition.
- Be Wary of Pressure: Take time to evaluate offers and don’t succumb to high-pressure tactics or “limited-time” discounts.
- Engage a Buyer’s Agent: If possible, work with a professional who represents your best interests exclusively.
- Request Transparency: Insist on clear communication about the property, including any price reductions, repairs, or issues.
Estate Agent Roles and Buyer Considerations
| Aspect | Listing Agent (Seller’s Agent) | Buyer’s Agent | Buyer’s Strategy |
|---|---|---|---|
| Primary Loyalty | Seller | Buyer | Understand the agent’s role and motivations |
| Commission Incentive | A higher sale price benefits the agent | Commission from the buyer’s side or a flat fee | Stay aware of potential conflicts of interest |
| Information Transparency | May withhold or spin details to favor the seller | Provides objective market data | Request documentation and verify independently |
| Negotiation Focus | Maximize the sale price | Secure the best deal for the buyer | Set a clear budget and limits |
| Common Tactics | Price anchoring, fake offers, and urgency creation | Research, verification, negotiation | Verify competing offers, avoid pressure |
| Buyer Support | Limited (represents seller) | Full support and guidance | Engage the buyer’s agent when possible |
Real estate agents are indispensable to the home-buying and selling process, but buyers must remain vigilant. Understanding that agents’ primary loyalty lies with the seller, recognizing common tactics such as fake discounts and phantom offers, and enlisting the support of a dedicated buyer’s agent are crucial steps to protect your interests. By combining thorough market research, skepticism of high-pressure tactics, and strategic use of professional representation, buyers can confidently navigate the real estate market and avoid overpaying due to deceptive pricing strategies.
3 Red Flags of an Overpriced Property
Identifying a fake discount requires more than just a gut feeling; it requires a sharp eye for specific patterns in how a property is presented. When a developer or agent is hiding an inflated price behind a “promo,” they often rely on behavioral manipulation to keep you from asking the right questions.
If you encounter any of the following scenarios, hit the brakes. These are the classic warning signs that the “deal” in front of you isn’t what it seems.
1. High-Pressure “Scarcity” Tactics
One common warning sign is when estate agents create fake competition by pressuring buyers to act quickly, saying there are multiple offers or that a special price will expire soon. This tactic tricks your emotions and stops you from comparing prices properly. Remember, a property that has been for sale a long time doesn’t suddenly become a hot deal just because you showed interest. Always take your time, do your research, and don’t let high-pressure sales push you into a rushed decision.
2. Evasive Behavior Regarding Property History
An honest seller has nothing to hide. Be cautious if an agent avoids giving you information about the property’s past or acts too pushy. If you ask about the price history, like what the unit sold for six months or a year ago, and the agent dodges your questions, it’s a warning sign. A trustworthy seller should explain why the original price was set high and be willing to show how the price per square meter compares to other units in the same building. If they can’t, they might be hiding an inflated price margin.
3. The “Permanent Sale” Phenomenon
Have you ever noticed a “Limited Time Offer” that seems to last for an entire year? This is a major red flag. If a development is constantly advertised with a 15% discount, then 15% off is not a discount; it is the actual market price. Developers use this to make buyers feel like they are getting a “VIP” rate. However, if everyone is a VIP, then nobody is. When the “sale price” is the only price anyone ever pays, it’s a clear sign that the initial “list price” was purely fictional, designed only to make the current price look attractive.
Comparison: Genuine Urgency vs. Manufactured Pressure
| Feature | Genuine Market Urgency | Manufactured Sales Pressure |
| Reason for Speed | High demand in a booming area. | Arbitrary “promo” deadlines. |
| Information Sharing | The agent provides comps and history. | The agent is vague or aggressive. |
| Negotiation Space | Based on a fair market appraisal. | “Take it or leave it” discount. |
| Verification | Matches data on HousingInteractive. | Significantly higher than neighbors. |
The Danger of the Aggressive Push. Buyers should be cautious of agents who push them to make an offer quickly, without allowing them to do their own research. This aggression is often a mask for a lack of value. A professional communication strategist will tell you that true value doesn’t need to be shouted; it stands up to scrutiny. If you are being bullied into a decision, it’s usually because the seller knows that once you look at the data on a platform like HousingInteractive, the “huge discount” will evaporate.
Steps to Protect Yourself: How to Verify Real Value
Protecting yourself from the “Overpricing Trick” requires a shift in mindset: you must stop being a spectator and start being a researcher. In real estate, information is the ultimate currency. If you rely solely on the brochure handed to you at a showroom, you are only seeing the version of reality the developer wants you to see. To ensure you are making a sound investment, you must peel back the layers of marketing and look at the raw data.
The Power of Market Research
Buyers should research the market to determine a fair price for the property, taking into account recently sold prices and current market conditions. It is not enough to know what properties are listed for; you need to know what they actually sold for. This is known as “comparative market analysis.”
When you use a platform like HousingInteractive, you gain access to a broader view of the neighborhood. If the “discounted” unit you are eyeing is priced at ₱250,000 per square meter, but the average sold price for similar units in the same street over the last six months was ₱210,000, you have immediate proof that the discount is a facade.
Evaluating Value Beyond the Price Tag
A property’s value isn’t just a number on a contract—it’s a reflection of its environment. Buyers should also consider factors such as school districts, transportation links, and local amenities when evaluating a property’s value. A “huge discount” in an area with declining infrastructure or poor accessibility is often just a price correction disguised as a deal. Conversely, a property at full list price near a future subway station or a top-tier school district might actually be a better long-term value than a “discounted” unit in a stagnant area. Use the following checklist to evaluate true value:
- Proximity to Infrastructure: Is there a new bridge, highway, or railway coming?
- Commercial Growth: Are major developers or BPOs moving into the area?
- Historical Appreciation: Has the land value in this specific barangay or district grown consistently over the last 5 years?
Leveraging Your Buying Position
How you pay can also be a shield against overpricing. A cash buyer may have an advantage in a competitive market, as they can offer a faster and more secure sale. If you are a cash buyer, you have significantly more leverage to negotiate. Since you eliminate the risk of bank loan disapproval (which developers fear), you can often demand a real discount on the base price, rather than settling for the “marketing discount” offered to the general public.
The Final Verification: Trust But Verify
The ultimate defense is the mantra:
Compare before you buy.
Never let a developer’s internal “price list” be your only source of truth. By cross-referencing listings on HousingInteractive and looking at independent market reports, you strip away the emotional “fake discount” and see the property for what it truly is: an asset that must be bought at the right price to ensure future profit.
The Importance of Transparency
Transparency is a vital component of the real estate sale process, and buyers should expect estate agents to communicate clearly and honestly. Agents have a responsibility to provide accurate and comprehensive information about the property, including any potential flaws or issues that could affect its value or desirability. Buyers should remain cautious of agents who appear evasive or secretive, as such behavior can be a warning sign of underlying problems or attempts to withhold important details. Maintaining transparency helps build trust between buyers and agents, enabling informed decisions and a smoother transaction overall.
Don’t Let a “Sale” Blind You
A discount is only a deal if the final price is at or below market value. Many buyers fall for the psychological trap of a “limited-time 15% off” tag, only to realize later that the base price was artificially inflated to begin with. In the world of real estate, the only number that matters is the comparable market value.
Real estate is a long-term investment. Don’t let a “fake discount” lead to a long-term financial mistake. Being a savvy investor means looking past the marketing fluff and focusing on the hard data
HousingInteractive: Your Benchmark for Fair Market Value
We believe that transparency is the ultimate antidote to overpricing. As the pioneer property portal in the Philippines, we provide a vast database of real-time listings that allow you to cross-reference prices and verify that your “deal” is actually a smart investment.
HousingInteractive, the Philippines’ first property portal, delivers property solutions that help you see through the “discount” smoke and mirrors. Before you sign that reservation agreement, head over to HousingInteractive to compare listings and ensure you’re paying the right price today!
