When you’re buying a house, one of the tools that we might need to implement to help you win in a multiple offer situation will be an escalation clause.
So what is an escalation clause?
This is an addendum that goes with the contract that says you will spend X number of dollars over the next highest and best offer up to a certain ceiling. As a buyer, you should know that sellers do not always accept escalation clauses. They may or may not be taking them. They tend to be confusing for people, sometimes they’re confusing for sellers, sometimes they’re confusing for their agents, sometimes they’re even confusing for you. So we may just go in with our actual highest and best, or we might layer on an escalation clause with the offer that we already have in place. So you’re not stuck losing the house over just a few thousand dollars. So if the house is priced at $800,000, you may be willing to go up to $820,000. If you really, really, really, really had to, you don’t want to lose it. However, you don’t really want to spend that much on it. So you may say we’ll give you $805,000 plus $5,000 more over the next highest and best offer up to a ceiling of $820,000 to enhance that offer.