Question about "escalating offer"

Buying & Selling Real Estate
8yFollow

Question about "escalating offer"

Adam Christopher Zaleski
Investor · Pueblo West, CO · Member since 2014 · 310 posts · 213 votes

One of my realtor friends just switched from selling new builds for a builder to being an independent real estate agent. She has a listing with multiple offers. One offer was labeled as an "escalating offer" They offered 365K, but can go up to 375K if there are multiple offers. However, they state in their offer that if they offer more than 365K they want proof of multiple offers and the amount.

Her boss who is the broker wants to tell the people with the "escalating offer" the amount of the highest bid to see if they can beat it. He has been selling real estate for 40 years. However, that seems really stupid to tell them the amount.

For the people offering the "escalating offer" I would tell them to "pound sand." If they really want it and they can offer 375K, then that's what they should offer.

Anyone have any experience with this type of thing. Seems like an unreasonable request to me. I actually have an offer on a bank owned property right now. There are multiple offers so the bank gave everyone the option to bid more. However the bank is not going to tell anyone the amounts of the actual bids.

0Reply
50 views

Most Popular Reply

Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
8y

Banks do not accept escalation clauses. So that is a big difference here.

If proof of the 2nd best offer is not produced, then there is no offer to escalate against.  So if the seller wants the higher price, they have to provide proof of the 2nd offer.  Plain and simple.  If someone told me to "pound sand" instead of providing the proof, then I would simply withdraw the offer and they can sell it to someone offering less.

[email protected]301-893-4635Podcast Guest on Show #192
District Invest Group545 Reviews
WebsiteView Page
4Reply
See this reply in the discussion

9 Replies

Jump to latestLatest
  • Michael Guzik
    Real Estate Agent · San Antonio, TX · Member since 2017 · 523 posts · 362 votes
    8y

    @Adam Christopher Zaleski That's a great question and a sticky situation tbh. I understand where that buyer with the escalating offer is coming from. They want the property, but don't want to pay the 375k right away if they don't have to. Everyone wants to get the most for the least amount but they screwed themselves over by saying they could offer that 375k. This is a sellers market not a buyers market. Your friend/agent is the one in control not them. You don't have to disclose sh*t to them about the exact amount of other offers. I agree with you 100%, I've never heard of people disclosing the exact amount of other offers much less sending them to the competition. Maybe I'm just ignorant and don't know but this is the first I've ever heard of that. My 2 cents is to be honest and fair like you should be with the selling of the home, and if there is an offer at or around 365k let that seller know. If they don't bump up their offer oh well they lose the house. I don't think that extra stress, time and paperwork for your friend or his company is worth an extra 10k.

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    8y

    Banks do not accept escalation clauses. So that is a big difference here.

    If proof of the 2nd best offer is not produced, then there is no offer to escalate against.  So if the seller wants the higher price, they have to provide proof of the 2nd offer.  Plain and simple.  If someone told me to "pound sand" instead of providing the proof, then I would simply withdraw the offer and they can sell it to someone offering less.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    4Reply
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    8y
    Apparently, escalation clauses are common in some areas, not where I am. The offer with an escalation clause should say something like.......”$1,000 above any other qualified offer, up to $375k”. So yes, you’d need to show that offer of say $$370, for their offer to escalate to $371k.
    0Reply
  • James Barnhart
    Rental Property Investor · Ocala, FL · Member since 2016 · 226 posts · 140 votes
    8y

    Getting really emotional about a home in probably not a very good way to buy or sell.  Why not just make your best offer based on the market conditions?  Why would you tell the seller's Realtor that you might raise the offer?  

    There are a lot of properties out there.  if you don't get to buy that one, the next one might be even better.

    0Reply
  • Adam Christopher Zaleski
    OP
    Investor · Pueblo West, CO · Member since 2014 · 310 posts · 213 votes
    8y
    Originally posted by @Russell Brazil:

    Banks do not accept escalation clauses. So that is a big difference here.

    If proof of the 2nd best offer is not produced, then there is no offer to escalate against.  So if the seller wants the higher price, they have to provide proof of the 2nd offer.  Plain and simple.  If someone told me to "pound sand" instead of providing the proof, then I would simply withdraw the offer and they can sell it to someone offering less.

    Why would someone go through all the extra trouble for an extra $1,000 on a 365K house? Why would a listing agent or seller give away leverage for free by telling them the amount of other offers?

    If the other offer is at 370K, they might gain 1K by telling the other buyer to beat it. If they don't tell them the amount they might gain an extra 5K because the other buyers might up their offer to 375K, which they already disclosed that they would be willing to do. Seems like the best play is to tell them to go "pound sand"

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    8y
    Originally posted by @Adam Christopher Zaleski:
    Originally posted by @Russell Brazil:

    Banks do not accept escalation clauses. So that is a big difference here.

    If proof of the 2nd best offer is not produced, then there is no offer to escalate against.  So if the seller wants the higher price, they have to provide proof of the 2nd offer.  Plain and simple.  If someone told me to "pound sand" instead of providing the proof, then I would simply withdraw the offer and they can sell it to someone offering less.

    Why would someone go through all the extra trouble for an extra $1,000 on a 365K house? Why would a listing agent or seller give away leverage for free by telling them the amount of other offers?

    If the other offer is at 370K, they might gain 1K by telling the other buyer to beat it. If they don't tell them the amount they might gain an extra 5K because the other buyers might up their offer to 375K, which they already disclosed that they would be willing to do. Seems like the best play is to tell them to go "pound sand"

     See how long that agent is in business by ignoring established industry practice. And there is no reason an escalation amount needs to be a small amount of money.  At this price point Id say a $5-10k escalation is the most common amount you would see. Ive escalated in amounts as high $50k amounts at higher price points.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    0Reply
  • Adam Christopher Zaleski
    OP
    Investor · Pueblo West, CO · Member since 2014 · 310 posts · 213 votes
    8y
    Originally posted by @James Barnhart:

    Getting really emotional about a home in probably not a very good way to buy or sell.  Why not just make your best offer based on the market conditions?  Why would you tell the seller's Realtor that you might raise the offer?  

    There are a lot of properties out there.  if you don't get to buy that one, the next one might be even better.

    I think it's important to communicate an unreasonable response from an unreasonable request. I have a few other examples below.

    One of my friends is a house flipper and got a low ball offer after the house has been on the market for 3-4 days. I think the listing price was around 300K and someone offered 250K. In my mind that is a stupid offer because the house has been on the market for less than a week. My friend countered at 325K. I think that is an appropriate response.

    My dad's neighbor was selling her house about 25 years ago. Both houses are on a small lake in the Midwest in a nice neighborhood and were worth about 250K at the time. She has used part of my dad's land for her own personal use and my dad didn't mind. When she was getting ready to close the buyers noticed that her lot wasn't as big as she had led them to believe. They found out that a big chunk of the yard belonged to my dad. A few days before closing she asked my dad if he would be willing to give her the land for free because it would help her sell her house. She gave him a long story about how she is broke and really needs to sell the house. She brought the paperwork with her and everything. When my dad said "no" she got upset with my dad. Then my dad said a few things to her that weren't very nice. At the time I kind of thought it was my dad being rude. However, she didn't understand how unreasonable she was being so my dad couldn't sugar coat it anymore.

    0Reply
  • Adam Christopher Zaleski
    OP
    Investor · Pueblo West, CO · Member since 2014 · 310 posts · 213 votes
    8y
    Originally posted by @Russell Brazil:
    Originally posted by @Adam Christopher Zaleski:
    Originally posted by @Russell Brazil:

    Banks do not accept escalation clauses. So that is a big difference here.

    If proof of the 2nd best offer is not produced, then there is no offer to escalate against.  So if the seller wants the higher price, they have to provide proof of the 2nd offer.  Plain and simple.  If someone told me to "pound sand" instead of providing the proof, then I would simply withdraw the offer and they can sell it to someone offering less.

    Why would someone go through all the extra trouble for an extra $1,000 on a 365K house? Why would a listing agent or seller give away leverage for free by telling them the amount of other offers?

    If the other offer is at 370K, they might gain 1K by telling the other buyer to beat it. If they don't tell them the amount they might gain an extra 5K because the other buyers might up their offer to 375K, which they already disclosed that they would be willing to do. Seems like the best play is to tell them to go "pound sand"

     See how long that agent is in business by ignoring established industry practice. And there is no reason an escalation amount needs to be a small amount of money.  At this price point Id say a $5-10k escalation is the most common amount you would see. Ive escalated in amounts as high $50k amounts at higher price points.

    The other poster was correct. It's a 1k escalation offer. Because it's 1K, I think it's stupid. However, I agree with you that a 10K escalation offer would be more appropriate based on the current price point.

    0Reply
  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    8y

    I was recently reading an article from NAR that stated there was nothing wrong with providing the information on offers to other parties.

    Even without that though, I don't like telling any legitimate offer to go "pound sand". If its 40k on a 180k property.... sure. But if market value is in your 365k range, going back and apologizing when the other one fails sucks. :)

    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free