what is an escalation clause in a real estate contract

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An escalation clause is a real estate contract,sometimes called an escalator,that lets a home buyer say:淚 will pay x price for this home,but if the seller receives another offer that higher than mine,I檓 willing to increase my offer to y price.?/strong>In theory,an escalation clause is fairly simple.

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  • What do you need to know about escalation clause offers?

  • Here what to know about escalation clause offers: What is an escalation clause in real estate? An escalation clause is a real estate contract, sometimes called an escalator, that lets a home buyer say: 淚 will pay x price for this home, but if the seller receives another offer that higher than mine, I檓 willing to increase my offer to y price.?/div>What Is an Escalation Clause And When Should You Use One?

  • How much can you offer on a house with an escalation?

  • For example, you may offer $300,000 on a home with an escalation clause stating that you will outbid other offers by $5,000 up to $321,000. So if another buyer makes an offer of $305,000, your escalation clause means that you will pay $310,000 for the home.

  • Should you add an escalator to your real estate offer?

  • An escalator can do just that. With an abundance of real estate transactions containing escalation clauses, it is clearly a useful tool in a hot market. However, it should be made abundantly clear up front that you or your agent better know what they are doing when adding an escalation clause in an offer.

  • How effective is an escalation addendum when making an offer?

  • Comparatively, an all-cash offer improves a buyer’s likelihood of success by 290%, and waiving a financing contingency increased a bid’s chance of success by 66%. Of course, providing an escalation addendum may be an additional strengthening factor to an offer that appeals to the seller in other forms.

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