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escalation clause in home buying

Buyer Tactics for a Hot Market

During a buyer's market, home buyer's are aggressive in their offers; making offers substantially below asking price with many seller concessions.  As the market has shifted, buyer's have

offering money

 had to direct heir agressive tactics to fighting off other buyers instead of beating up on home seller's.  

In the current market, buyer's are taking big risks in order to win in competitive bidding.

One effective technique for offering more is known as an escalation clause.   When making an offer on a home, agreeing to pay add additional amount in specific increments to a price up to a maximum price.  

This can help a buyer make an offer that is fair, without offering too much higher than other offers. It can protect a buyer in the event that another offer comes in slightly higher than they pay.  Usually an escalation clause will require evidence that a higher offer was received by the seller.  This evidence "triggers" the escalation clause.  

Drawbacks of Escalation Clauses


While this can help in some cases, sometimes the seller is more comfortable withoffers that come in higher.  There are even times when the seller may not consider escalation clauses because their agent doesn't notice the clause, or doesn't understand.  


Another setback has been that escalation clauses might not be accepted by the seller, or the seller receives several offers with escalation clauses and it gets too complicated.   Many things can take place given the fluid nature of the market, but its always possible that it might be the edge that you need to win in competitive bidding.


When making an offer with an escalation clause, your Realtor and an attorney can help with the correct language that will work in given situations.  This post is meant for information only and does not constitute legal advice.

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