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Escalation Clauses Give Buyers an Edge

Here’s how an escalation clause can help buyers compete in our market.

The spring market started in January of this year, and the market is hot. Inventory is low, and buyers have been out searching for any new homes to come on the market. When we do list a property, they typically receive multiple offers and sell for at or above list price. That, in turn, puts upward pressure on home appreciation.

If you’re a buyer in this market, multiple offers are almost an inevitability. So how do you win with all that competition? One tool you can use to your advantage is an escalation clause.

 

An escalation clause is a very useful tool for buyers who are worried about the enormous competition they face in today’s market.

 

An escalation clause is a part of a contract where a buyer authorizes their listing agent to increase their offer price above a competing offer’s purchase price, up to a set maximum. This gives them a sliding scale so that they can beat out the competition without overpaying for the property.

On the listing side, escalation clauses aren’t always welcome. They can alleviate buyers’ fear of loss and they can increase the home’s appreciation, which is complicated for the seller’s side because they need to prove to the appraisers that their home is worth the accepted offer’s price.

Ultimately, an escalation clause is a very useful tool for buyers who are worried about the enormous competition they face in today’s market.

If you have any questions about escalation clauses or buying a home, don’t hesitate to reach out to us.

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Testimonials

I had the pleasure of working with Timothy and his staff during the late summer and fall looking for a new home. I found Timothy to be a refreshing change from the other realtors I’d worked with in the past. He was particularly attentive to my needs, as opposed to trying to sell me his listings. At every possible turn he went out of his way to make sure I was in a good place at that particular…

Kind regards, KurtLess