Are you a buyer that is frustrated by multiple offers in the current real estate market? Consider using an "Escalation Addendum" to submit with your offer. Let's take a look at and explain what an Escalation Addendum is:
Escalation Addendum- Part of a purchase and sale agreement for an offer to purchase property. Using the addendum above; Let's say that a home is for sale for $400,000, but there are other competing offers for said home. You would be willing to pay as much as $450,000 for the home. Should you just offer $450,000? Not necessarily. In the example above, the Escalation Addendum automatically escalates your offer by $3,000 above the next highest offer. This ensures that you have a higher offer than others, while also capping what you are willing to pay.
Explaining the above Addendum:
- If the seller receives other offers for the property this addendum escalates your offer to $3,000 higher than theirs (escalation amount). There is also a spot to specify what your maximum offer would be. In this case, the max offer will be $450,000.
- The competing offer must be a bona-fide, arm's length offer, not a fake offer from seller's brother Bill.
- Seller's acceptance and escalation of this offer must be accompanied by the competing offer.
- This paragraph helps to assist with calculating the new offer amount.
- This paragraph covers financing terms, if not a cash offer.
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