When They Go Low, Should You Go High? 6 Times to Increase Your Asking Price After Listing

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When They Go Low, Should You Go High? 6 Times to Increase Your Asking Price After Listing

  • 10 January, 2018
  • By Admin: Debbie West
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When They Go Low, Should You Go High? 6 Times to Increase Your Asking Price After Listing
By Wendy Helfenbaum | Jan 9, 2018
Sonja Flemming/CBS via Getty Images; realtor.com
This might sound familiar: Your house is up for sale, people have come to see it, and then nothing but crickets. So the logical thing to do would be to drop your listing price, right?

Not necessarily.

Pricing your home right is a complex science that depends on a multitude of factors—all of which are changing on a seemingly daily basis. Conventional wisdom urges some restraint when it comes to pricing your home at top dollar, and that’s usually the right way to go. After all, you don’t want to alienate buyers. Plus, if you price too high, you’ll be forced to do a reduction—which can create a nasty stigma around your home.
But in some situations, it might actually make sense to increase the list price to get buyers’ attention. Sounds crazy, right? Well, here are six scenarios where you could be justified in increasing your asking price after you’ve listed your home.
1. The market conditions have changed since you first listed

You know that phrase “competition breeds desire”? It’s rarely more true than in a seller’s market. Buyers, in their frenzy to compete, often won’t hesitate to engage in bidding wars to score a home, and may perceive that a home priced a notch above the others as being more desirable.

If you’re noticing that comparable properties near you are selling for more than your sticker price, raising your price just might pique buyers’ interest, says Jim Paulson, owner/broker at Progressive Realty Corporation in Boise, ID.

“Typically, the time to raise the price is when the laws of economics with client demand warrant it—that is, if prices are rising quickly and inventory is dropping,” Paulson says. (The good news? For most of the country, that time is now.)

To be clear, we’re not talking major increases here. Sometimes you can open the door to more buyers just by bumping up to the next price category.

For example, pricing a home at $199,900 will catch buyers looking at listings up to $200,000. But if they’re looking between $200,000 and $250,000, your home may not show up, Paulson explains.

“If you’re at one of those psychological break points, then it does make sense to blow that barrier so that you reach a different demographic without drastically changing the price,” he says.

In other words: If someone is looking for a home between $250,000 and $300,000 and you change your list price from $249,900 to $251,000, you’ll reach a whole new segment of buyers—who may see your home as a bargain for this category.

2. Your house has features its newly listed counterparts do not

In a competitive market, you want to stand out from the pack. Keep an eye on new listings in your area to make sure you haven’t undervalued your home. If the new listings are comparable with your home for sale—but you have more features to tout—you may want to increase your list price.

Buyers comparing similar homes—say, with the same floor plan or square footage—might be willing to pay more for additional features such as an in-ground pool, says Ramonita Acevedo, a Realtor® with Coldwell Banker Residential Real Estate in Miramar, FL.

“Often a price increase could be justified in that case, because two identical three-bedroom homes may sell at different price points because one has something that gives it more value,” she says.

3. You upgraded your home after it was listed

If you installed new hardwood floors or replaced your kitchen cabinets and your list price doesn’t reflect these improvements, you could be sitting on an untapped gold mine. Acevedo recalls someone who upped his property’s list price by $100,000 after renovating it.

But be judicious about which home upgrades you decide to factor into your list price.

“It has to be something major, such as a new roof, because a home’s value won’t go up much higher just because you put in a granite countertop,” Acevedo says.

And make sure you know which features today’s buyers are clamoring for before you go swinging a sledgehammer and relisting your home. For example, revamped kitchens and bathrooms add the most value to a property. Some renovations, on the other hand, such as a garage converted to an office, might turn off clients.

And if you’re thinking of passing along all your remodeling costs to potential buyers, think again.

“Buyers look for something that’s move-in ready and not a money pit, so if you’ve got a house with a very dated kitchen and all the neighbors have renovated ones, it’s probably time to do that,” Paulson says. “But you don’t always get a dollar-for-dollar return, so be very careful how you spend your money.”

4. You want to pique interest by relisting

If you take your home off the market and then list it at a higher price, you could draw in buyers who haven’t had the chance to visit it yet.

“You don’t even have to delist it; you can just edit it,” Paulson says. “Because in our automated world, if you like my listing and you favorited it, and I change that price point by a dollar, the system will flag it and let you know there’s been a change in the listing you liked. It gives your house that top-of-mind awareness to buyers.”

5. The appraisal value comes in higher than your current listing price

Usually, buyers pay for an appraisal after an accepted offer to justify the sales price for the bank. But sellers can also hire a certified appraiser early in the process and use the report to justify increasing the listing price, says Dustin Harris, a residential real estate appraiser and president of Appraisal Precision and Consulting Group in Idaho Falls, ID.

“The few dollars invested in hiring a third-party, unbiased appraiser is a drop in the bucket compared to what can be lost by selling a property incorrectly,” Harris explains. “If an appraisal comes back higher than the perceived listing price, trust it.”

Of course, if you’re going to shell out for an appraisal, it’s best to do this before you list your home, so that you have the right price from the start. But, Harris adds, sellers can and should make changes when necessary.

“Adjusting a listing price to better reflect market value is better than selling it for too little and risk losing money,” he says.

6. Serendipity steps in

Once in a while, conditions you may never have expected can swing housing prices, Paulson says.

“For example, last winter in the Boise area we had a very extreme winter, so we couldn’t dig any foundations or build new houses effectively for about two months,” he recalls. “That depleted our inventory, because we can’t replenish with new supply, and it created an opportunity for sellers to increase prices because we had decreased our supply.”

Just be sure your home is still priced fairly and that you have the data to back it up. Otherwise your strategy could backfire, Harris says.

“Marketing is about perception,” Harris says. “Will there be questions if a listing price is raised after the fact? Sure, but the answer is, ‘We employed (professionals) who understand the market and assisted us in properly listing it.’ That’s all you need.”

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