Escalation Clauses: Eliminate the Fear of Over-Bidding

In the current real estate market, prices are sticking stubbornly high and rates refuse to significantly offset. Buyers are struggling to find ways to make offers more attractive, so here is a quick tip to avoid overpaying in a hot market.

Ever been in a situation where you think: “ooh I like that house, but I’m sure it’s going to fly off the market and I don’t want to be the sucker who overpays.”?

FOOB (Fear Of Over-Bidding (patent pending on that acronym 👀)) is real. No buyer likes leaving money on the table by being be tens of thousands of dollars ahead of the next best offer.

Enter the Escalation Clause.

The Escalation Clause allows you to eliminate the game of guessing what it will take to put forward the best offer, without overbidding by thousands. Interested? Then use the Escalation Clause as follows.

Let’s say a house is listed at $500k and you’re willing to pay $550k. The escalation clause to $550k allows you to say “hi Mr & Mrs seller, I’ll give you $500k for your house, but if someone else bids above me, my offer automatically increases by $1k above them. Count me out when you get to $550k”.

So the next time a property of your interest goes to “Highest and Best”, give yourself the best chance of being highest, but don’t your leave your money on the table.