If your house is on the market and it's generating plenty of interest, you may wonder if you can or even should raise the asking price. Just as you can lower the price if your house doesn't sell, you can also raise the asking price -- as long as you're not under contract. However, before telling your real estate agent to raise the price, conduct some due diligence regarding the current housing market in your area.
As long as your house is still on the market and not under contract, you can raise the asking price.
When Prices Naturally Rise
Although you can raise the asking price, in many markets that isn't necessary. If the demand for your property is so high that it results in multiple offers and bidding wars, potential buyers should bid the price higher naturally. If your area has low inventory, that will drive up pricing as well. If you're considering raising the price simply based on the demand for similar homes, without evidence of strong interest in your particular house, that strategy could backfire if it scares off potential buyers.
Examine the Market
If you've already listed your house and a home very similar to yours sells higher than your asking price, you might want to raise your home to that price. But before doing so, consider all the factors. Compare the sold house to yours in terms of size, style, features, location and condition as well as any financing concessions offered by the seller. A house that seems similar to yours on the surface might appear quite different under close examination.
Downside of Raising the Price
It's understandable that you would want to raise the asking price of a house you feel is truly undervalued. On the downside, if you price the house too high you will cut out a lot of your market. Even if you sell for a high price there should be a comparable recent sale to support the price in an appraisal. Otherwise, the buyer's lender might balk at the price -- unless you're lucky enough to receive a cash deal.
Consider Buyer Qualifications
Rather than concentrate solely on a higher asking price, consider buyer qualifications as well. It doesn't matter how much a buyer offers for your house if he can't get a mortgage loan. Your best bet is a preapproval letter from a reputable lender. If a buyer has only a prequalification letter, that means he can probably afford to buy a home in a certain range; it doesn't mean he has actually qualified for a loan.
A preapproval letter, on the other hand, means a lender has qualified a potential buyer for a mortgage. Although this approval is contingent on verifying the information on the buyer's application and on all the supporting documents, it's a step closer to final mortgage approval than simply a prequalification letter. You or your real estate agent can ask for permission to get information from the buyer's lender.
Full Price Offer
If you receive a full price offer, you don't necessarily have to accept it. It all depends on your state's laws. In some states, you have the choice of either accepting an offer at or above your asking price -- without contingencies -- or taking your house off the market.
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