It’s official: Homes are selling at their fastest pace since Redfin began tracking sales seven years ago. And due to the fierce competition among buyers for homes, prices have also increased by 7.5% since this time last year.
In such a competitive market, how can a buyer get ahead? Escalation clauses just might be a home buyer’s most powerful weapon. You’ve probably heard by now that we’re in a “seller’s market” and that many homes are receiving multiple offers from buyers. This can become an arduous process for prospective buyers, but utilizing an escalation clause may ease some of the frustration.
Here’s how they work: Let’s pretend you’re submitting an offer on a home for $200,00 but you and your real estate agent are aware that another offer or two could also be coming in shortly. Your agent may suggest using this Escalation Clause, which is essentially an addendum to the contract that states that you will raise your offer price if and only if the sellers receive another offer that is higher than yours. Typically, this escalation clause will state that your offer will raise in specific increments (let’s say by $1000) over the competing offer – but only up to a specific amount (up to $210,000 for example).
While escalation clauses used to be fairly uncommon, they’ve become a far more popular option in today’s busy market! Be sure to speak to your EveryHome agent for individualized assistance.