It’s a game where buyer is always in dark and at disadvantage.

We just bid on a property and provided an escalation clause that went up over $250k over ask. There were five total offers, and apparently none of them got to the price "the sellers were hoping for." We had the highest cap, but they refused to show us where the escalation landed based on the next best offer. Instead, they countered with "a number they would feel comfortable with." While that number was slightly under our cap, we were unwilling to engage without receiving documentation showing where the escalation ended, and they didn't want to show their cards. Deal fell through because of ridiculous games on the part of the listing agent. They claim they got another offer to "come up" and are ratified. Listing agent told our realtor that "we would be disappointed," but the listing is still active on MLS. Total insanity. Buh-bye!

We got ours for 25K below our cap. We bid on another property where the sellers agent solicited updated bids after the offer deadline without saying what the top bid was. So that was a transparent effort to trigger the escalation clause to a higher level.

Anonymous wrote:OP, the agents don't even need to be involved necessarily. All the seller needs to do is recruit a friend to make a bogus offer. The friend can just find some unsuspecting buyers' agent to put in the offer. So really all it takes is an unethical seller who has a friend willing to do it. When potentially hundreds of thousands of dollars on the line, it strains credulity to think this doesn't happen. But good luck finding out and proving it -- the seller and the friend will stay tight lipped and enjoy their riches.

And a bank. You need to submit financing information.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:fake offers, friends, none of that is necessary. Just think of this like a game of cards, poker. An escalation offer shows your hand to the seller and both agents. It announces to everyone what you're "willing" to pay. Same for the other escalation offers. The seller and agent(s) can now use this intel to form their own conclusions, to call it a day and settle, or milk it for more by countering the highest offer, or telling other escalators to make their "best and final." Even if you have the highest escalation offer, you're not forced to fork over your money. You can bow out before paying EMD and let the next highest offer go to the seller. It's a semi-transparent way of chicken, buyer and seller probing comfort zones. Very DC after all

This!!! A lot of people seem to think the offer process is this strict process where an escalation clause is very official. It’s not. You’re basically telling the other party what you’ll pay. In a hot market they can easily just counter at your top price.

But they will know that you don't have a better offer. Why would they pay the top of their escalation?

Because the buyer doesn’t know that they will get the house if they turn down the counter offer The seller is saying they won’t sell unless it goes up. They might not even be risking much, there may really be an offer that’s better in other ways but slightly lower in price.

As others have said, the competing bidder may have been higher still just not the one they went with. We bid on three houses, the two we lost sold at our offer price, not a penny more. Clearly we were cannon fodder. In the first case I think the other offer was a quicker close, in the second the seller wanted a rent back and we didn’t write that into our bid.

Best case an escalation clause means your offer is nearly identical to someone else’s. After that it’s the seller’s choice.

2020: After losing several bidding wars, we offered 5% below asking with an escalation to 10% above asking. Settled at 2% below asking.

FTR, I think the sellers/agent did some a shady thing or two along the way, but apparently straw bidding up the escalation was not one of them.

Anonymous wrote:

Anonymous wrote:fake offers, friends, none of that is necessary. Just think of this like a game of cards, poker. An escalation offer shows your hand to the seller and both agents. It announces to everyone what you're "willing" to pay. Same for the other escalation offers. The seller and agent(s) can now use this intel to form their own conclusions, to call it a day and settle, or milk it for more by countering the highest offer, or telling other escalators to make their "best and final." Even if you have the highest escalation offer, you're not forced to fork over your money. You can bow out before paying EMD and let the next highest offer go to the seller. It's a semi-transparent way of chicken, buyer and seller probing comfort zones. Very DC after all

This!!! A lot of people seem to think the offer process is this strict process where an escalation clause is very official. It’s not. You’re basically telling the other party what you’ll pay. In a hot market they can easily just counter at your top price.

But they will know that you don't have a better offer. Why would they pay the top of their escalation?

I did. Just one other offer at list, so my escalation only went up to my next bump. My ceiling was about $20k more

Anonymous wrote:fake offers, friends, none of that is necessary. Just think of this like a game of cards, poker. An escalation offer shows your hand to the seller and both agents. It announces to everyone what you're "willing" to pay. Same for the other escalation offers. The seller and agent(s) can now use this intel to form their own conclusions, to call it a day and settle, or milk it for more by countering the highest offer, or telling other escalators to make their "best and final." Even if you have the highest escalation offer, you're not forced to fork over your money. You can bow out before paying EMD and let the next highest offer go to the seller. It's a semi-transparent way of chicken, buyer and seller probing comfort zones. Very DC after all

This!!! A lot of people seem to think the offer process is this strict process where an escalation clause is very official. It’s not. You’re basically telling the other party what you’ll pay. In a hot market they can easily just counter at your top price.

Anonymous wrote:fake offers, friends, none of that is necessary. Just think of this like a game of cards, poker. An escalation offer shows your hand to the seller and both agents. It announces to everyone what you're "willing" to pay. Same for the other escalation offers. The seller and agent(s) can now use this intel to form their own conclusions, to call it a day and settle, or milk it for more by countering the highest offer, or telling other escalators to make their "best and final." Even if you have the highest escalation offer, you're not forced to fork over your money. You can bow out before paying EMD and let the next highest offer go to the seller. It's a semi-transparent way of chicken, buyer and seller probing comfort zones. Very DC after all

This. My parents used an escalation clause and the sellers just came back and countered at their max escalation amount.

I own a large dc title company. They don’t max out all of the time. Your sample size is just too small.

fake offers, friends, none of that is necessary. Just think of this like a game of cards, poker. An escalation offer shows your hand to the seller and both agents. It announces to everyone what you're "willing" to pay. Same for the other escalation offers. The seller and agent(s) can now use this intel to form their own conclusions, to call it a day and settle, or milk it for more by countering the highest offer, or telling other escalators to make their "best and final." Even if you have the highest escalation offer, you're not forced to fork over your money. You can bow out before paying EMD and let the next highest offer go to the seller. It's a semi-transparent way of chicken, buyer and seller probing comfort zones. Very DC after all

Op, usually it hits top because you are escalating off of the other offers too number.

For example… if listing is 1 million and there are two offers. One that escalates yo to 1.18m with increments of say $20,000, and a second offer with escalation up to $1.2 with increments of $25k, what happens is the $1.2 offer escalates off the $1.18 top number. Does that make sense? Anyway, people tend to escalate up quite a bit and I’m not sure buyers understand that you escalate off of someone else’s escalation offer, not their base offer sans escalation.

OP, the agents don't even need to be involved necessarily. All the seller needs to do is recruit a friend to make a bogus offer. The friend can just find some unsuspecting buyers' agent to put in the offer. So really all it takes is an unethical seller who has a friend willing to do it. When potentially hundreds of thousands of dollars on the line, it strains credulity to think this doesn't happen. But good luck finding out and proving it -- the seller and the friend will stay tight lipped and enjoy their riches.