Are homes for sale nabbed left and right in your targeted neighborhoods? That’s the way it is in many real estate markets today, and it usually leads to that dreaded house hunting reality: bidding wars.
Escalation Clause: An aid in Bidding Wars
If you’re thinking about buying a house within an area where bidding wars are typical, you may want to considering including an escalation clause within your offer. It could possibly become a crucial tool in any multiple-offer situation.
An escalation clause indicates that your offer is automatically increased via a specific amount as a result of a competing buyer’s higher bid, having a maximum offer price stated in the contract.
Here’s the way it works: Let’s say you’re offering $120,000 on a house. As part of your escalation clause, you specify your bid can automatically go up by $2,000, as an illustration, having a maximum offer of $135,000. When another buyer bids $122,000, your lower offer doesn’t miss out immediately, since the clause automatically escalates it to $124,000.
There are several important considerations to make regarding escalation clauses. There are situations when we might advise against it dependant upon the homebuying climate in your local market; it may possibly be that some sellers won’t consider an offer consisting of the clause. At the same time, we might view it as the leg up you must have in your area.
Also, you’ll have to make sure your mortgage pre-approval amount makes it possible for those increases – and you’re able to pay for the higher monthly bills that are included with approaching your maximum buying power. It’s recommended that you discuss it with your lender before choosing to utilize an escalation clause.
The point: Low inventory and bidding wars will never have to discourage you against making an offer with that ideal home. You’ve got options.
Ready to find your new home? Nick & Cindy Davis with RE/MAX Premier Group are here to assist you. We are always a just a click here away or call to 813-300-7116
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