When you decide to sell your home, you need to figure out the strategy for setting your listing price. One method is speculative selling, or listing the selling price above the current market value. Glenn Phillips, CEO of Lake Homes Realty, explains why this strategy will cost you money:
- Two Types of Sellers:
- Motivated: Most sellers of primary residential homes have some motivation to sell their homes. This typically includes life events such as new jobs, moving towns, changes in the number of family members, or limiting health concerns.
- Speculative: This often happens with discretionary property, such as lake homes. Speculative sellers don’t have to sell and don’t necessarily have an urgency to sell their home. They typically list their home over the market price to see if they can get a high bid.
- Speculative Selling Risks: If you are considering a speculative selling strategy, consider these risks.
- Increased Time on Market: Due to the overpriced nature of speculative listings, they tend to sit on the market for an extended amount of time. Buyers today use a plethora of online tools that inform them of what the current market is like. These buyers aren’t willing to pay the extra premium if the price is way above the market value.
- Lack of Urgency: With speculative selling, sellers tend to be unmotivated to sell the home. Even if interested buyers want to look at the house, speculative sellers may decline them because they have other plans that day.
- Consequences:
- Increased Time-On-Market Creates Buyer Doubt: When buyers see an overpriced house sit on the market for too long, they begin to question if the house has other issues.
- Repeated Price Cuts Teach Buyers to Offer Low: Buyers pay attention to continuous price cuts on your listing. This teaches them to offer lower than the current listing price, even if it’s a good market price.
- Eventual Sale Price Often Less Than Market: Speculative selling can lead to fatigue, and they just want to be done with it. Sitting on the market for so long also comes with other costs. These can be HOA dues, insurance, utilities, and more that will eat into your selling profits.
Before selling your lake home, think about the pricing strategy you want to use. You need to decide if you are a motivated or speculative seller. However, you need to be aware that speculative selling comes with risks and consequences. To connect with agents who can help you with listing your house, visit lakehomes.com.