I purchased an item for buy it now price. The seller wants to cancel my purchase and re-list for more money?
Say "No". Pay and demand shipment. If seller refuses, open an Item Not received case, escalate it as soon as possible, and give him a black mark, as well as Negative Feedback. Seller set the Buy It Now price, if it was too low that's his fault, he should stand by his word and the terms of his sale.
And if they actually emailed you and stated that they wanted to relist for more money, report the email to eBay. That is wrong and unethical. Sellers like that should not be selling. They are unprepared and impractical.
This just happened to me. I bought and went to pay for an unused Phils Dodgers ticket from May 25, 2014. Beckett's No-Hitter. It said $3.50 was B-I-N. I hit it, and it was $10.00. Fine. Still a deal. I went to check out and it rerouted me to merchant. It never processed, and timed out. It said 7 were sold previous. No record of that, or my bid, or my win, or my payment, or that the auction existed at all. SUSPICIOUS???
Most likely this Seller is going to refund your money. Call eBay and let them know that this is going on. These emails will continue all afternoon if you don't.