Escalation clause...yes/no?

[Anonymous]

Anonymous wrote:The truth is that most houses in hot neighborhoods likely only get one offer, and nothing about what's been described about this house suggests that it will be different. In fact, it seems like this house may be overpriced. I personally would not offer more than ask, and I definitely would not escalate.

As with any house, I would just be at peace with the fact that I might lose. Other houses will always come on the market, even in hot neighborhoods.

Tell me you don't live in DC without telling me you don't live in DC.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I would include the escalation clause, but if they try to push you toward the upper end, just tell them they already have your best offer.

So you have no idea how the clause works. They don’t "push you to the upper end" other offers do

I sold earlier this year, we looked at the 3 highest price offers, then the better terms of those 3. With no escalation, you might not be in the top 3.

They absolutely do. You’re telling a seller what you’ll pay for the house. What’s your max price?

Fairly certain it doesn't legally go to your higher offer unless there is a legit offer from a 3rd party that is higher than yours. Of course, there's a slim chance their agent is super sketchy, but that's unlikely.

[Anonymous]

OP, we bought in a small, coveted upper NW neighborhood. All the houses I'm aware of here get multiple offers, unless they're in a really bad location/ lot or something is very off about it (like realtor totally botched the asking price and it sat). Even the ones in rough shape get multiple offers, as you're competing with people that want a completely renovated home (and have the $$ for it) and developers.

We generally did escalation clauses unless the seller didn't want them (there are some old school realtors and sellers that didn't). I felt more protected by the escalation because we could back out if it hit our max, while I would have felt stupid if we put a best and final where the next offer was 60K lower or whatever. My understanding is that all cash doesn't help much if you're offering a lot lower. We were not paying all cash, so we put in a high escalation amount to outbid the attractiveness of all cash. And we waived all contingencies.

I'm not sure where you're looking, but maybe your realtor can get info on how these types of homes tend to sell in that neighborhood. For example, there's one that just went pending on Yuma that seems to need a gut reno and didn't have an open house.

[Anonymous]

I'm the OP of this and want to report back on our experience with escalation clause. It was our first time using it to buy a home and would recommend it if 1. you're in an extremely competitive market, and 2. both buyer and seller side realtors are well regarded in the market and wouldn't risk their reputation just to make extra $1k of commission after tax.

We won the bidding war with our escalation clause and didn't go up close to the max price. The law allows us to review other offers after we won. There were 4 other offers and we beat the 2nd best by $5k. So I absolutely recommend it.

[Anonymous]

Anonymous wrote:I'm the OP of this and want to report back on our experience with escalation clause. It was our first time using it to buy a home and would recommend it if 1. you're in an extremely competitive market, and 2. both buyer and seller side realtors are well regarded in the market and wouldn't risk their reputation just to make extra $1k of commission after tax.

We won the bidding war with our escalation clause and didn't go up close to the max price. The law allows us to review other offers after we won. There were 4 other offers and we beat the 2nd best by $5k. So I absolutely recommend it.

NP and we just won a bidding war at our very last escalation. We had debated if we were going to include that one or not. So whoever we beat maxed out just below us. We live in a neighborhood that rarely has houses on the market so people lie in wait for anything decent even if it needs a lot of work. To lose out on the house for that amount would have been crushing. Keep in mind that each escalation is really a small amount of time across the entire life of your mortgage.

My opinion of cash offers as a seller is that they’re not an advantage unless you suspect the appraisal will come up short. In many places, especially where teardowns are common, the land is worth more anyway so this isn’t an issue.