Escalator clause on REO

[Oakley Pack]

Hi everyone, I'm new at this but have found all of the discussions to be very insightful so I'm curious to hear your thoughts on my situation. I put in an offer on an REO home that has been on the market for more than 3 months for about 70% of asking price. I expected that it would be countered, and it was, with the seller countering at 97% of list. He also mentioned that there had been another offer for 82% of list. I countered at 86%, but the response was that now there is another bidder and we are to send the "highest and best offer". It seems like a strange thing to me, because if I actually paid my highest and best offer (which is I'd say maybe 95% of list), that's right at the point where it starts to not make financial sense anymore. I need to get it at something below my highest and best offer to want to do the deal. So I am forced to make a guess at some offer below 95% of list that balances out the gain in profits versus the lowered chance that I get the deal?

I feel like the easiest way out of this is submitting an offer that says something like "I am willing to offer 1% more than any other highest offer, up to a specified amount (95% of list price). Something like:

“In the event of a competing offer the buyers will pay 1% over the highest offer’s net up to a purchase price of $. In the event of an escalation, seller to provide proof of competing purchase contract with preapproval or proof of funds. Seller represents and warrants that competing offers are true and valid offers."

Does anyone have experience submitting an escalator clause like this to an REO? The owner is Freddie Mac in this case. Would this cause my offer to be completely disqualified for not following the rules? Or has this worked for people before to help get a good price without paying your true "highest and best"?

Thanks!

[J Scott]

I guess it's possible that a seller and listing agent would accept such a clause, but I think it's highly unlikely in an REO purchase. And it's very highly unlikely that any reputable listing agent will show you another buyer's offer for any reason.

Mostly likely, this will get your offer ignored, unless it's the best offer at your original price.