Escalation Clause versus waiting to make a counteroffer?

[Anonymous]

Anonymous wrote:We sold in July. We had 5 offers the first day, 3 with escalation clauses. We did not go back to the others at all, we took the 2 highest clauses and chose the one with better terms, that ended up being #2 in price, but the $5k extra on the top one didn’t beat out the better terms. I’d guess no escalation, you won’t get the chance to counter.

This. The offers coming in are so good now that it's not worth it to waste time with getting a counteroffer. When we bought last year, our realtor said that if we weren't willing to put forward our highest offer, then we should do an escalation up to that amount because no one was doing counter offers anymore.

[Anonymous]

Anonymous wrote:

Anonymous wrote:My experience is that the agents communicate verbally about the potential competition and may mishear (bad cell phone reception, new secretary, etc.) so we got the wrong information. The agents are picking up a call while doing something else, and may not really be checking notes. They are not typing into a portal or text message, so miscommunication happens more easily than if the numbers are written down.

That said, the fall market moves more slowly so I might take a risk at this time of year and save some money. In a hot area in the spring, go with an escalation clause.

What??

Everything is over emails and text nowadays, I think that PP must be in their 70s.

[Anonymous]

I do escalation but with a 24 hour time out. I don't want the seller to shop my offer around to jack up the price.

[Anonymous]

DO not use an escalation clause ever! That's a fools way to pay more.

[Anonymous]

Anonymous wrote:Don't do escalation. Agents abuse them and will just tell other buyers that you've made an offer at the top of your escalation. Also, you never know what games are played to trigger the escalation.

In almost all situations, if you don't do an escalation but your offer is competitive, agents will try to get you to counter -- so that's the better route. There's still abuse here (agents sometimes lie and say that there's a higher offer when there isn't), but it's not as terrible.

THIS. It is abused and unethical the crap the do.

[Anonymous]

Anonymous wrote:You make your best offer with 24 hours deadline.

The last thing you should do is to allow seller to shop around due to your offer.

Excellent advice here! Do not use an escalation clause.

[Anonymous]

If you want the house, include the escalation clause. With multiple bids, I wouldn't bother with people who didn't include one, because I assume they've put forth their best offer- it is still a sellers market

[Anonymous]

Anonymous wrote:Where I've seen it useful and to the buyer's advantage is when the seller's agent announces that that are taking offers until a certain deadline (usually 2-3 days after going on the market).

Many times, I see house still listed after a week of so called deadline.

Just ignore all these antics, make the offer when you are ready and make the offer with a price making sense to you.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Where I've seen it useful and to the buyer's advantage is when the seller's agent announces that that are taking offers until a certain deadline (usually 2-3 days after going on the market).

Many times, I see house still listed after a week of so called deadline.

Just ignore all these antics, make the offer when you are ready and make the offer with a price making sense to you.

As a seller, there were no antics. We did post a deadline once it was clear we would have multiple offers, and we did use the escalation clauses. I think the agent circled back to everyone before we ratified? But maybe not because it was basically immediate. There was no lying and it was all honestly very orderly.

[Anonymous]

Hmm for those saying escalation is for suckers and you will be taken advantage we had an escalation clause and won out of five bids coming in $5k below asking, then the two identical houses to ours were sold for asking. Definitely didn't hurt us at all and yes, stops from counteroffers and keeps you in the loop, especially with multiple offers.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Where I've seen it useful and to the buyer's advantage is when the seller's agent announces that that are taking offers until a certain deadline (usually 2-3 days after going on the market).

Many times, I see house still listed after a week of so called deadline.

Just ignore all these antics, make the offer when you are ready and make the offer with a price making sense to you.

As a seller, there were no antics. We did post a deadline once it was clear we would have multiple offers, and we did use the escalation clauses. I think the agent circled back to everyone before we ratified? But maybe not because it was basically immediate. There was no lying and it was all honestly very orderly.

It's perfectly fine in your case, but many times it's just antics. Comments were not about you specifically. It was a general comment.

[Anonymous]

Anonymous wrote:I do escalation but with a 24 hour time out. I don't want the seller to shop my offer around to jack up the price.

+1

[Anonymous]

Escalation clause is idea for both buyers and sellers. DO NOT include one if there aren't any other offers. DO include and ask for proof of escalation - so you can see the other offer amount before agreeing to any escalated contract price. This is a fantastic way for buyer to only pay what market will bear ... rather than best and final type scenario.

[Anonymous]

Escalations are great for buyers' agents, which is why they encourage buyers to use them. Agents' goal is to collect the commission as quickly as possible, and nothing helps achieve that goal like escalation clauses.

[Anonymous]

Anonymous wrote:You make your best offer with 24 hours deadline.

The last thing you should do is to allow seller to shop around due to your offer.

This is how we got a house this past spring. The day the house went on the market, we made our best offer, over asking, 24-hour deadline. I don't know why the sellers didn't do multiple offers with a deadline, but they didn't, so we got it. I know at least one other offer came in after ours.