Escalation Clauses: Your Saving Grace in a HOT Real Estate Market!

Christina! Just find me a house - any house!!

Are you getting frustrated or disheartened about making an offer on your new home? You'd like to take advantage of these relatively low prices and interest rates, but it seems like the rest of the world is too!  Not to mention you may also be competing against cash buyers.  Some reports indicate that they represent half of the US home buyers.

How come it seems that some agents are getting their buyers the house they want almost ALL THE TIME?  They have a little trick up their sleeve, and some agents who have been out of the loop for a while may not know about it, or even how to use it.  The "trick" is called an Escalation Clause.  What is an Escalation Clause, you ask?  It's a clause that stipulates that the buyer will automatically increase their offer, up to a limit, should the homeowners receive a higher offer.

For example: A home comes on the market "right-priced" at $250,000 and you feel there will be multiple offers, but you're not 100% sure. Your agent can help you write a clause that states the buyer is willing to increase their offer in increments of $2,000 up to a maximum of $265,000.  Now you and your agent need to research the market to be sure the home would appraise for your purchase price to make sure you're not just caught up in the heat of it and over-paying for the home.  You'll also want to make sure you are qualified to get a loan for the higher amount and that you have enough of a down payment and closing costs.

Our team has a lot of experience with receiving offers with this type of Escalation Clause.  During the height of the REO sell-off, investors were trying to scoop up anything they could.  Nearly 100% of the time that we received an offer with an escalation clause, the bank accepted that offer. They really just cared about the bottom line, but of course, they wanted to make sure if it was a financed offer that the home would appraise.

If you are afraid of starting your home search because you've heard all the stories about people getting outbid, Click Here to get in touch with us.  We'll put you in touch with an exceptional agent in your area who is knowledgeable on this practice.