You settled on what you thought was an appropriate asking price and put your home on the market. You were comfortable with that price when you listed it, but now you’re having second thoughts. You want to get the most money possible out of the sale, and now you’re considering raising the price. But can a seller raise the price of a house after it’s listed?
The answer depends on the specifics. You can raise the price of your home in certain circumstances, but not in others. (And in some situations, you might find yourself in ethically murky territory if you do.)
With expert feedback from top-selling Newark, New Jersey-based agent Ronald Collins, here’s our overview of when a seller can raise the price of a house and the pros and cons of employing the strategy for your specific home sale.
Why would a seller raise the price?
Even if you did plenty of research and measured consideration before you worked with your agent to set a list price, there are situations in which you might still see fit to raise it after it’s on the market. For instance, this is a hot seller’s market when prices are naturally rising — sharply, and speedily — leading to multiple offers, bidding wars, and other seller-friendly market conditions.
Can a seller raise the price of a house?
There are certain situations in which it is permissible, and others in which raising the price on a home is not allowed. Let’s look into some specific situations more closely.
Can you raise the price on a home after listing it?
If you have listed the house but do not yet have offers on it, raising the price is easily done. “If you list the house and decide to increase the price you can absolutely do that when an offer hasn’t actually been accepted yet,” Collins says. “Maybe you could just tell by the feedback in the marketplace that perhaps it was underpriced.”
Can a home seller reject a full-price offer?
Theoretically, yes, because the seller might determine that the full-priced offer is not the best among the offers — perhaps because the would-be buyer’s financing looks dicey, or because there’s a slightly lower offer for all cash and with fewer contingencies.
“Ultimately it is at the seller’s discretion to determine what the best offer is, and the decision is not totally based on price,” Collins says.
Can a seller counter a full-price offer?
Yes. Imagine a situation where the seller got multiple full-price offers and is setting up for a bidding war. That seller might counter all of the appealing full-price offers, asking each suitor for a best and final bid, or request a specified higher price.
“If you had a multiple-offer situation, you would let all of the buyers’ agents know of that,” Collins says. “You’d ask for a deadline that gives everybody the opportunity to reevaluate their offer and then the seller can make a decision off of that.”
Can a home seller change the price after a contract is signed?
No. Typically, when a seller wants to back out of a contract, it’s because the house appraised much higher than the offer and the seller wants a do-over. Unfortunately, at that point, you’d be legally obligated to go through with the under-contract buyer.
There are some ways around this in certain cases, however. For instance, if the seller is trying to buy and sell a home simultaneously, they will often include a contingency of sale in their real estate contract. And if the home they wanted to purchase falls through, they might then have grounds to back out of the contract legally — but only if the clause is explicitly written into the contract.
Can a seller raise their asking price after an offer has been made on the previous asking price?
“Even if you didn’t have multiple offers, you could theoretically counter, although that could raise a red flag from an ethical standpoint,” Collins says, referring to the possibility that a buyer could make a complaint to the real estate commission, alleging discrimination. “From a best-practice situation and from a risk-management situation, and in today’s climate, I would instruct my client that it could open them up to review,” he explains.
Collins advises getting clear on your reason for not taking that full-priced offer: “Why are you doing what you’re doing if you were to be challenged, could you explain your behavior? You can always say, I just decided not to sell. But if you reject the offer and you take a lower offer, you really open yourself up to potential liability when you can’t explain your decision.”
If from the very beginning, the interest is such that you’re getting a lot of really strong buyers or maybe even cash buyers who have the capacity to perform, that’s the market communicating the price. Then you should absolutely raise the price because the market is communicating to you that obviously the property is worth more than what you originally thought — and you should listen to the market.
- Ronald Collins Real Estate AgentCloseRonald Collins Real Estate Agent at eXp Realty Currently accepting new clients
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What to consider if you raise the price
Even when you are technically permitted to raise the sale price of your home, there are both pros and cons to consider as possible consequences of making this move. Here are some of the major pros and cons:
- Put simply, raising the price of your home might just yield more money for the seller from the sale.
- Raising the price on a home you inadvertently lowballed can bring it up to a more appropriate price point that the market can and will support. “If from the very beginning, the interest is such that you’re getting a lot of really strong buyers or maybe even cash buyers who have the capacity to perform, that’s the market communicating the price. Then you should absolutely raise the price because the market is communicating to you that obviously the property is worth more than what you originally thought — and you should listen to the market,” Collins says.
- Raising the price could cause the home to sit longer on the market — and eventually, that stale-looking listing could become toxic to buyers. “The prime time to sell is in the first 30 days,” Collins says. “In this market, it should sell in 10 days. But beyond 30 days, from the psychology of the buyer, there’s a problem even if there’s nothing wrong with the house.”
- Raising the price of the home too high could create a discrepancy with the appraisal value, a critical figure for a buyer getting a mortgage. “Most buyers are going to have a mortgage, so you always have to keep in mind the appraisal,” Collins says. “You don’t want to overprice. Because if it doesn’t appraise, the buyer has to have the ability to pay that differential. If not, then the deal falls apart.” That is, unless you decide to renegotiate on the price.
- Inflating the price artificially will not help you negotiate more money for the house. “Even though we’re in a seller’s market right now, sellers want to unrealistically set the price to allow room for negotiation. And that’s fine if it’s reasonable,” Collins says. “But no matter what you do, the market dictates the price, and if it’s really beyond what the market expectation is, it’s really just hurting the seller.”
When to raise the sale price of your home
If you have inadvertently given your home a price lower than the market will support, consider raising it — ideally before you have any offers. If you have multiple offers all at or above list price, consider countering these offers with a new ask higher than the original list price.
The bottom line
In some instances, a seller may raise the price of their home once it’s on the market. But this is most easily done before any offers are made. And changing the price of a home at any stage can have consequences that must be considered carefully. Work with a top real estate agent who has knowledge of the local market and vital experience with real estate transactions to nail the right price.
“If you have an agent that really understands what’s going on in that specific market, you’ll set the right price in the first place,” Collins says. “In the end, you really shouldn’t have much of a variant between your original list price and the selling price.”
If the price requires a ton of adjusting, Collins says, that probably means, “the price wasn’t set appropriately in the first place.”
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