You’ve probably heard of sellers lowering the listing price of their homes if they’re not generating enough interest. Reducing the price of a home is typically done if the price was listed too high in the first place, or if the market is losing steam and the demand isn’t necessarily at par with supply.
But increasing the price of a home after it’s been listed isn’t as common as reducing it. The question is, can it be done? And if so, why?
Take a Close Look at the Market
If you feel that the original price that you listed your home at isn’t as high as you believe your home is worth, it’s important to closely examine the current market before you hike up your price.
Ideally, an analysis of the market and similar homes in your area that have recently sold should have been done before you initially listed your property. That way you would have listed at an appropriate price that would have attracted qualified buyers and resulted in a successful sale.
However, if you recently updated your home after listing on the market, that could be a valid reason to increase the listing price. And in a hot seller’s market, the competition can be fierce between buyers, making it more possible for you to increase the price of your home, particularly if other homes in the area have been selling at higher price points.
If a home very similar to yours just sold for more than what you are currently asking, you could consider raising your price to match that number. But you first need to consider all factors and closely compare the home in terms of location, square footage, style, lot size, upgrades, age, and condition.
You should also take into consideration any concessions that the seller may have offered the buyer, which could inflate the perceived market value of the home.
Consider Your Contract
If a prospective buyer has already put in an offer and you signed it back, you are considered to be under contract and cannot increase the price at that time. That said, if you are taking backup offers, these may entertain with your new higher price.
If the contract is not fulfilled after contingencies were not met and escrow did not close in time, the contract is no longer considered valid. At this point, you’re free to make any changes to your listing price before accepting any new offers on your home.
Buyers May Be Turned Off By an Increase in Price
Increasing the listing price of your home is certainly risky business, and perhaps the biggest risk that you take is turning buyers off. Increasing your listing price could foster a reduction in interest in your home, especially if the price increase goes well beyond what the current market dictates.
The majority of buyers who have their eye on homes for sale will be annoyed by an increase in price. If they are on the fence about putting an offer on a home, a price increase can be just enough to nudge them in the opposite direction.
Buyers who are working with professional real estate agents will have access to the price history of your home. Armed with this information, a prospective buyer could assume that the price increase was made with little reason and that you would still settle for the old lower price. As a result, they may be more inclined to lowball you.
And since buyers can see the price history, you may have to do some explaining when questioned about the price increase. In this case, it may be worth it to take your home off the market for a week or two and relist with the new higher price. However, this, too, should only be done with caution and only if absolutely necessary.
The Bottom Line
There are few instances where a price hike may be warranted. In these cases, thorough research should be done to make sure there is enough evidence to support this bold move, and a real estate agent’s guidance should be sought.
Having said that, it’s always best to make sure that the listing price you choose before your home goes on the market accurately reflects the current market. It’s much easier to work with an appropriate listing price than to have to raise or reduce it after the fact. As part of the selling process, determining the right listing price is one of the most important components.