Escalation Clause?

In these parts, do people actually use it? Do they even know about it? Or, too risky that one may end up paying substantially more than planned (well, you wanted that house right?)?

I wonder what would happen if more than one buyer offer the escalation clause, each offers $1000 more than the other highest bidder. Do the buyers commit to the maximum price immediately? It will be more interesting if neither puts a maximum in the contract: it can go to infinity quickly. :slight_smile:

Yeah, I was thinking about this too. Probably could use some input from a realtor. I will have to ask my realtor buddy for the real low-down on what actually happens then. I can see the LA gaming it for maximum profit…

Exactly. It wouldn’t be difficult to have a friend write an “offer”. As long as it’s a signed offer, then it’d trigger the clause. Does it really matter if the friend doesn’t have the money or couldn’t get the loan to make good on the offer? I think anyone using it should put a cap on their max bid.

Hey @SamShuehRealtor,

Care to give us some insight on the use of the escalation clause?

I tried it once before. Most professionals do not want to deal with it.

I have contemplated using this in the past and every time I brought it up the agent squashed it immediately. I cannot recall the rationale.

This is interesting. First time I heard of this. Just thinking thru this.

It seems that if the market is medium-hot, and there are 2-3 offers, this might be useful and manageable.

In a market (like Bay Area today) where there can be more offers (like 5-10), this escalation clause can be a turn off, backfire, and offer gets ignored.

When more offers are there, few top offers meet the seller’s expectation. They won’t go extra step to churn the offer process, but close the deal with right buyer.

Then escalation clause is waste.