How to Snag Your New Home with an Escalation Clause
As I’m sure you’ve heard we are in a really hot real estate market. Potential home buyers are finding themselves in highly competitive situations, and the majority of new listings are receiving multiple offers. The inventory of homes on the market continues to be low and buyer demand continues to increase. This can make it really tough for someone looking to take advantage of today’s low interest rates. Well, there is a tool called an escalation clause that you can use to help you snag that new home.
What is an Escalation Clause?
It is part of a contract that states you will pay x price for a home, however, if a higher offer is received then you will increase your price up to a specified amount. I liken it to eBay, when you bid on something and then you put in what your maximum bid would be. Each time someone outbids you, you in turn outbid them until you reach your max.
When Should You Use One?
As I mentioned, it is very competitive out there for home buyers. However, you should consult with your real estate agent before considering one. It can be a powerful tool when you are in a multiple offer scenario, but it you could lose some negotiating power if no one outbids you. The amount you are willing to go up to is written on the contract and is seen by the seller’s agent so they will know how much you are willing to pay.
While there are many ways to submit a strong contract, an escalation clause could help you get that new home. Your biggest concerns should be getting a strong Pre-Approval, and working with the right agent.
We can help with both, so give me a call or text at (314) 472-DOUG (3684)
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