escalation clause in contract how to screen fake offers pls Help?

Question

Put in an offer for 153k with an escalation clause to 167k and it was escalated to 166k how can I check the legitimacy of the offer that caused the escalation?

Russell Brazil · Answer

Escalations protect the buyer. Try operating in markets without them where you have to bid blind. Just sold a house in Massachusetts where they do not use them. Best offer was $650k. 2nd best was $615k. The buyer paid $30k more than they needed to if they simply used escalation clauses there.

Steve Morris · Answer

If a buyer put an escalation clause in the offer could the seller then  counter at the top of the escalation clause whether someone else bid up to that or not?

Sure, the buyer's tipped his hand already which is another reason why I don't like an escalation clause.  You're letting the seller write the buyer's offer.

Joe S. · Answer

If a buyer put an escalation clause in the offer could the seller then  counter at the top of the escalation clause whether someone else bid up to that or not?

Russell Brazil · Answer

In my market if you counter at the max as opposed to enacting the escalation clause, we just reject the counter, and in most cases people are so angry, they just walk away. 99% of the time here countering at the max escalation will lose the buyer entirely in ny market.

Steve Morris · Answer

With an Escalation clause can the sellers agent tell all future buyers agents that there is an escalation clause Up to XYZ to get the offers up?

I wouldn't consider that very ethical, however, I work with brokers that'll do that whether the number is real or not.

My guiding principal has been whatever I tell one buyer I need to tell ALL buyers.

Steve Morris · Answer

"There is nothing wrong with countering the 162K with escalation clause at a number you feel compensates for the conventional and inspection. "This is just a counter with a seller being tipped off by the escalation clause amount.  Why wouldn't he counter at max?  The seller's goal (at least in OR) is to get the max price.

Mike Cumbie · Answer

@Joe S.

Yes,

House listed at $160K 3 offers on day 1

1) 158K FHA with 3% concessions

2) 160K Cash with no inspection

3) 162K Conventional with inspection and escalation clause up to 170K

There is nothing wrong with countering the 162K with escalation clause at a number you feel compensates for the conventional and inspection. The price is one piece of the puzzle. You may counter the Cash offer. An escalation clause has let the seller know there is room and they want this deal to come together.

Robin Krieb · Answer

@Ethan Antwain Reynolds ask for proof of the other offer(s). Often times this will be given without pertinent or personal info (sans other buyers' names for example). This was you know it's legit....but unfortunately can be faked if someone really wanted to.

Russell Brazil · Answer

The difference is it simply doesnt really happen. Ive been doing this 17 years, been involved in hundreds of transactions, 1000s of offers, and Ive seen a fake offer once.  Agents simply dont risk going to jail to make an extra fifty bucks.

Lien Vuong · Answer

I operate in MA and use Escalation Clauses when the time is right. Not all agents/sellers accept them and that's their choice but can be a very good tool if you know how to exercise it properly. Be aware to use "Subject to full review of competing offer".

escalation clause in contract how to screen fake offers pls Help?

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