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Escalation Clause Helps Your Offer Stand Out

Randal Engelmann & Erik Gould

We are Randal Engelmann and Erik Gould, partners in providing exceptional customer service...

We are Randal Engelmann and Erik Gould, partners in providing exceptional customer service...

Jul 20 3 minutes read

An escalation clause is a key negotiation strategy to help you win your offer.



Randal:
We're going to have to escalate this.

Erik:
Welcome to Stay Focused, Focus Real Estate's weekly video series. And today we are talking about very relevant topic, escalation clause.

Randal:
And escalation clause is when you actually put a clause in your offer to say, I will pay more for your house than the other person is paying for your house. In a situation where there-

Erik:
So much over.

Randal:
Yeah. In a situation where there is multiple offers. One of the things that I think people get wrong in escalation clause is they'll go, "I'll pay $1,000 more than the highest offer." Give them a reason to accept your offer.

Erik:
Yeah. $1,000 isn't very motivating to a seller.

Randal:
So typically buyers put in a clause. I think the ones that sellers find most appealing are $5,000, $10,000 over the highest offer. There's many different ways to use your escalation clause and you have to be artful in these, again, in how you're doing it, because you could say, "I will pay $5,000 over the highest offer up to this point." And you're basically-

Erik:
Putting a cap on.

Randal:
There is your hand. So there's strategies for using a cap. There are strategies for not using a cap. There are strategies for putting this together, to get your best benefits.

Erik:
There are different ways to protect the buyer in that situation.

Randal:
And then we have for all of our attorney friends out there that are like, "A contract's not a contract unless it's fully specified." And I don't really mean to say that our attorneys talk like that. They don't. A contract is in a contract predicated on a different contract that isn't even valid.

Erik:
Yeah, referring to another offer.

Randal:
So basically what we use these and how we use these escalation clauses is to get your foot in the door, get a number that's acceptable to the seller, and that's not the offer the seller signs. The offer that the seller signs then is the offer that we rewrite-

Erik:
Final agreed-upon price.

Randal:
Final agreed-upon price. So what this is, is this is not necessarily a contract, but a negotiation strategy-

Erik:
It's a tool.

Randal:
And it's a tool.

Erik:
So, if you want to know more about escalation clauses, tune in, drop us a line, ask us a question.

Randal:
And until next time, stay tuned and stay focused.

Erik:
Stay tuned and stay focused.

Randal:
We could go on forever. This could be six videos.

Erik:
So- 

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