What's the best offer? - $Escalation -OR- High offer + Money back

[Tommy Brant]

Hello BP! 

Wanted to get some perspectives on what's most appealing to a seller when putting in an offer. Would love to know your thoughts on this. I have framed up a question specific to my experience, but have also posed a very general question that may be more valuable to answer. I'll defer to you which you want to take a stab at ;) Thanks in advance for providing your perspective!

Here's some background:

Single family rental property is for sale on MLS, but the list price is such that I could yield positive cash flow if rented. Other real estate investors are drawn to this property, and it's obvious to other investors this is an appealing property. Thus, a competitive landscape. As a result, the property will likely be under contract within 1-2 days. That leaves me with enough time to scout and put in one offer. I will not have insight as to what others are offering.

For the purpose of this example, let's assume all financing would be the same.

I found myself pondering between 1) making an offer with an escalation clause VS offering 2) far more than asking price(let's say it's higher than any of the escalation clause thresholds) and asking for the seller to pay some in closing costs(or some other cost). 

It seems like the escalation clause is the most reliable in winning this blind bidding war, but I was curious to experiment with offering more ahead of time and asking them to pay some back at closing. 

What would you recommend?

Maybe another way to ask my question: if you knew competition was fierce, how would you recommend an opening offer?

[Russell Brazil]

If it is a competitive situation, then operate under the assumption that it will be impossible to get an offer accepted with closing cost help even if you increase the price.

Use an escalation clause, and use an escalation  amount with some teeth in it...no rinky dink $1,000 increments.