Winning a Real Estate Bidding War With an Escalation Clause

Are you currently trying to find a single family house for sale in a seller's market, but tired of constantly losing to other buyers? If so, it is time to switch up your strategy. Here is what you need to know about using an escalation clause to win a bidding war on a home you love.

What's An Escalation Clause?

An escalation clause is a different type of way to make an offer on a home. Instead of listing a very specific number of what you are willing to pay, you say that you are willing to pay a certain amount of money more than what the top offer is. This means that you end up beating the top bid and can win the home, but know you won't be overpaying too much more than you have to.

How Much More Do You Offer?

The amount of money you offer with an escalation clause depends on the total value of the home and what would make it worth it for the seller to accept. For example, if you are purchasing a home that is worth $200,000, then you may want to only offer $4,000 over the top offer. If the home is $500,000, then you'll need to offer a significant amount more to make the difference worth it to the seller.

How Can You Avoid Being Lied To About The Top Offer?

You'll want your real estate agent to request a copy of the top offer to verify that it is real. The names can be blacked out to protect the buyer's identities on the offer letter, but it helps prove that the offer is a real one. If the seller decided to fake a high offer, this would be considered a form of fraud, and they could be held liable for it.

How Can You Get Out Of A Winning Offer?

If you are worried about the top offer being way too much, you can always request a right of last refusal. This allows you to hear what the price of the home would be after the escalation clause, and give you the option to walk away from the home in case the other buyer offered a ridiculous amount of money.

Can A Seller Decline Your Offer?

It is up to the seller to decide if they want to accept your escalation clause. It is entirely possible that they decline your offer completely, or tell you to go back and revise the offer with a dollar amount. Either way, the odds are likely in your favor by offering an escalation clause.

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Finding The Ideal Property When you start thinking about where to buy a home, it can be really overwhelming. The right home can really brighten your life, while the wrong home can be a financial strain that causes more problems than it resolves. On this website, you will be able to find out great information about choosing the right property, and knowing what to do when it comes to starting the house hunt. After all, your home will be one of the biggest investments you can make, which is why it pays to focus seriously on making the right decisions. Check out this blog for more information.