An escalation clause can help a homebuyer win in this market.

In this very competitive home-buying market, you can win with an escalation clause. When you decide to write an offer, there are a couple of directions you can go. The first is the traditional highest-and-best offer. The second is an escalation clause, which we’re breaking down today.

There are three components of the escalation clause:

  1. Your original offer. This is the amount you’re offering in the event that nothing is escalated.
  2. How much you’ll escalate over and above the highest offer.
  3. Your max offer. This is where the offer caps out.

Let’s assume you want to write an offer for $720,000 and pay no more than $780,000. We would write the initial offer of $720,000 and set a cap at $780,000. Then we would decide the factor in which you would write over and above the highest and best offer. Typically, we are finding that a 1% increment is the magic number. Putting less than that doesn’t always give you the edge.

After you make your offer, it’s up to the seller at that point. If you want to know about other ways to enhance your offer or have any other questions related to real estate, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.