Can I Raise the Price of My House After It’s in Escrow?

When you list your house for sale, the process can be overwhelming with numerous details to manage. One common concern is whether you can adjust the purchase price after entering the escrow period. Escrow is a crucial phase in the home buying process, filled with specific conditions and agreements. Understanding what you can and cannot do during this time is vital for a smooth transaction.

Understanding the Escrow Period

The escrow period is a legally binding agreement between the seller and the buyer where funds or property are held in trust by a third party, typically an escrow agent. This period allows both parties to verify the terms of the contract, have a property inspection, and complete the necessary paperwork. During this phase, any changes to the agreed-upon terms must be carefully considered and often require renegotiation.

Legal Implications of Changing the Price

Contracts for property sales are legally binding. Once you sign a purchase agreement stating a fixed price, altering that price is not straightforward. If you try to increase the price after the escrow period begins, there are several negative consequences that can arise:

Loss of the buyer's deposit: If the buyer backs out due to the price change, they are entitled to retain their deposit. This is a significant financial loss. Suit against your agent: Your agent can file a lawsuit against you for any fees and expenses incurred due to your actions. Agents are responsible for managing the transaction, and disrupting it can lead to legal troubles. Termination of the contract: The contract can be nullified, which means both parties are released from their obligations. This could result in a delay or cancellation of the transaction.

Essentially, raising the price after the escrow period has started is not a viable option unless you are willing to face these consequences. It's important to carefully consider the terms of your agreement and be prepared to honor them.

Alternatives for Adjusting the Price

While it may seem inflexible, there are ways to adjust the sale price if certain circumstances arise. Here are a few alternatives you can consider:

Negotiation with the buyer: Approach the buyer and discuss a new price. If both parties agree, you can renegotiate the terms without disrupting the escrow process. Timely disclosure: If there are changes in the home's condition or value, provide timely disclosure to the buyer and negotiate before the escrow period begins. Escrow contingency: Include an escrow contingency clause in your contract that allows for price adjustments under certain conditions, such as a pending appraisal or home inspection results. Pre-emptive negotiation: In the early stages of negotiations, be open to discussing price adjustments. This can help prevent price issues in the future.

Conclusion

In summary, raising the price of your house after it is in escrow is generally not advisable. It can lead to financial losses, legal complications, and the termination of the contract. Instead, focus on negotiating before the escrow period begins, providing timely disclosures, and including contingency clauses in your contract. This approach will help ensure a smoother and more successful home sale.