Background: I have 4 dropdown lists on my page that all use one List of SelectListItem to pull data from. All 4 of these dropdowns will always
The code you currently have is the best way to do it, and it should work just as it is. SelectListItem does have a Selected property, but this is most usually set by a SelectList instance. Otherwise, you'd have to manually set this property somewhere on your own. Since you're using IEnumerable instead of an instantiated SelectList, all of the items should default to having Selected as false. It's only when Razor renders the DropDownListFor control does you enumerable get turned into an actual SelectList and have its selected value set based on the model. Check your other code and make sure you're not setting the selected status manually anywhere.
FWIW, you don't need to add an empty item manually: the DropDownListFor control has a means to add an empty item to the list.
@Html.DropDownListFor(x => x.SelectedItem1, Model.PossibleItems, string.Empty)