Escalation Clauses

3 Replies

Was reading this article today and read about something I had never heard of before. Escalation Clauses. Basically the author describes using this strategy when the buyer's agent asks for best and final offers. Rather than blindly raising your offer, the author suggest putting an escalation clause within the offer which basically stipulates that you will beat the highest competing offer by a couple hundred dollars up to a specified price cap. This protects yourself against needlessly raising your offer in situations such as this.

I was wondering if fellow BP faithful have had experience structuring your offers in this way? Thanks!

http://www.heraldextra.com/business/local/utah-cou...

Originally posted by @Holden Latimer :

Was reading this article today and read about something I had never heard of before. Escalation Clauses. Basically the author describes using this strategy when the buyer's agent asks for best and final offers. Rather than blindly raising your offer, the author suggest putting an escalation clause within the offer which basically stipulates that you will beat the highest competing offer by a couple hundred dollars up to a specified price cap. This protects yourself against needlessly raising your offer in situations such as this.

I was wondering if fellow BP faithful have had experience structuring your offers in this way? Thanks!

http://www.heraldextra.com/business/local/utah-cou...

Do you see how some unethical realtors may take advantage of you using this strategy?

Account Closed Thanks for the reply!

Obviously if the seller or his/her agent had this information they could have a third party put in a dummy offer just to enact the escalation clause. 

If my agent was unethical and only cared about maximizing his own commission he could similarly direct a third party to put in an offer to drive my price up to the escalation clause's cap.

While this is a risk, I believe if you are confident in your escalation cap and trust your agent this type of clause in the long run could potentially save you a lot of money.