How Can Escalation Clauses Help You Beat out the Competition?

Louisville, KY Real Estate Podcast with JP Pirtle

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7y ago

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Because of the hot competition we’re seeing lately in the market, escalation clauses have become much more common.

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Recently, we’ve been seeing a lot of escalation clauses in our market. But, what is in an escalation clause?

An escalation clause is a buyer’s best and final offer. People have been making these kinds of offers for years, but recently they have become a lot more important. This is largely thanks to our being in seller’s market where competition is hot.

Buyers right now don’t want to lose out on the right home, but they also don’t want to have to make excessively high offers.

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Setting a limit will help ensure that a buyer doesn’t pay a ridiculous amount.

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An escalation clause allows buyers to stipulate that they will pay up to a certain amount limit in order to beat out other offers. As an example, an escalation clause might state that a buyer will pay up to $1,000 over any other offer that is made.

This cap means that buyers don’t need to be as worried about overpaying. Setting a limit will help ensure that a buyer doesn’t pay a ridiculous amount.

Buyers must also be careful, though, to compare offers by the net sale price. In your escalation clause, ask to see the best and highest offer.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

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