Mar
21
Escalation Clauses

If you want to buy a house in this crazy market, you have to think smart. Your offer has to stand out from all the other offers and one way to do that is through escalation clauses.

Escalation clauses are like the eBay of real estate. It’s a lot like bidding on a house without the whole auction aspect.

In the escalation clause, the buyer (aka you) puts how much more money you’re willing to pay than the current highest offer AND your spending limit.

Lets say there’s a house on the market for $300,000. Buyer Ben puts in an offer for $305k. You put in an offer for $300k WITH an escalation clause.

Your escalation clause says you’ll pay $5,000 more than the highest offer up to $320k.

Assuming the seller is only concerned about house price, your offer should get accepted and you’ll pay $310k for the house.

Now if you’re a little worried that a seller could take you for a ride and pretend like they have other offers when they don’t, never fear. An escalation clause is only triggered when the seller has proof of a bona fide, legitimate, and enforceable offer from another buyer.

Escalation clauses can give you peace of mind about your offer while also making sure you don’t overpay more than you need to for a house.

Thinking about how you can win a bidding war and get into your next house this year? Send me a message and let’s figure out how to make that happen!