How Escalation Clauses Work

Many Offers
Looking at many offers

I came across a very timely article last week, “How escalation clauses work” written by Bill Gassett. It appeared on his “Massachusetts Real Estate “blog, and like most of Bills offerings it was timely & explained one of the dynamics that occur when home buyers are standing in line to buy houses.

Even tho that market is clear across the country from Tooele Utah, the problems that can be created by an up market are the same everywhere.

I sent it out to our offices as a reminder to the agents that their attention to detail and understanding purchase contracts is perhaps more important now than ever.

Just because we often have a number of contracts to review doesn’t mean that our input is not needed by our sellers.

This piece presented some of the pitfalls of having too many buyers making offers on a single listing.

Read what bill has to say, and if you are an agent pass it along to your seller (or home buyer). If you are selling your house and think you don’t need an agent when business is so good. Read this and think again.

Here’s what Bill had to say and then a comment from Chris Sloan our Broker when asked for a coment

What is an Escalation Clause and How Do They Work

Posted: 24 Jul 2017 04:13 AM PDT

How Does An Escalation Clause Work In hot real estate markets, it is not uncommon for a seller to get multiple offers for a home. As a buyer, the situation can become frustrating as you make offers – only to lose to other buyers that go higher and having to repeatedly find another house to […]

The post What is an Escalation Clause and How Do They Work appeared first on Massachusetts Real Estate Exposure.

Here is some of what our Broker Chris Sloan had to say about the artical.

We saw a few of these earlier in the year. On the listing side, they are a pain.

The biggest issue I have had is with the appraisal.

Appraisals have been lagging behind offers anyway, and this can make it worse. Managing the sellers expectations when they suddenly are going to get 10k less than the offer is problematic.

When the appraisal comes in low, you often have to explain to them (your seller) that another offer they didn’t take may have actually been better based on factors other than price, such as cash down or higher EM, shorter closing window, etc. 

However, my favorite was the listing we had with TWO escalation clauses, both written by agents that didn’t understand everything laid out in this article, specifically the caps!

 I asked UAR to look at creating a form to handle these offers, but it’s a struggle as every offer is different and there are so many ways to write them…Have fun!

Thanks for taking the time to visit my blog. I hope you found something in this post that was helpful and will cause you to remember me when you decide to list your house or buy a new home. I’m local and have helped many Tooele home owners buy or sell Real estate out here.

See what I bring to the table as a partner by clicking on the about Berna page on my website. To see what I know about real estate, I invite you to read some of the tips I have published on my blog. When you are ready, let’s talk. 435-840-5029. I know Tooele real estate and I know about how escalation clauses work.