> Listing prices are almost totally meaningless. At most they're just a starting point for initial negotiations.

Not sure if you have no experience in real state at all, or just want to play devil’s advocate.

The listing price can have a huge effect. Like I described before, if the listing price is lower than the perceived value of the listing, it makes it attractive to a wider audience, because people that wouldn’t be able to afford the property at the “real” price will think they can now afford it, thus there will be a lot more offers and that gives the realtors (and seller) very good leverage. This happened to me personally, on “the first round” the seller got 40 offers, so the agent used that to pump up the price and make it look like there was a lot of interest (surely there was, but for an unrealistically low price). There were only 3 offers on the “second round”. After 3-4 rounds, the property ended up going for 20%+ over asking and the buyer had to waive all contingencies. Without the artificially low listing price, they would have probably gotten one or two offers at the most and most likely would have not been able to get the buyer to waive contingencies.

Conversely, if the listing price is too high, the property might take a long time to sell, and lowering the price signals that the seller is either in a hurry or that there’s an issue with the property, either way the seller loses a lot of negotiating power.

I have experience in real estate. Listing prices are largely irrelevant. Your concern is completely misplaced and you don't understand causality. Multiple rounds of bidding are common in high demand areas regardless of whether the listing price is aligned with the market value.