What is an escalation clause and how do they work? Real Estate offers are seeing more escalation clauses due to a strong sellers market.
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With real estate markets across the country having turned significantly in sellers favor, buyers are often locked out of the home they want to purchase.
Multiple offers and bidding wars have become the rule and not the exception in many places around the country.
Quite often buyers are up against numerous other buyers who want the same home that they do. Frustration mounts when buyers continuously make offers on homes only to lose out to someone else.
One great way to increase your odds of success as a buyer is to use an escalation clause in your offer. An escalation clause allows a buyer to increase their offer to a set amount over the next highest bidder.
By having an escalation clause you dramatically increase the chances of being able to land the home you want.
There is, however, a lot to know about how an escalation clause works. It is important to understand they are a legal part of a contract and you must honor the clause.
In my latest article at Maximum Real Estate Exposure, I go over in-depth everything you need to know about how to make an escalation clause work for you in an offer.
Understanding the "cap price" and the "escalator" are important components to an escalation clause.
If you are a real estate agent reading this it is also important for you to understand how the escalator clause works. Whether you are using one for a buyer or advising the seller - you must understand this concept.