What is an escalation clause? How does it pertain to you as a homebuyer?

The escalation clause is something that’s written into your contract by your buyer’s agent. It states that you will pay X amount of money (let’s say $500 to $1,000) over the asking price of any other bona fide contract that the seller receives prior to the acceptance of any offers. The escalation goes up to a certain dollar amount.

Let’s say the house you want is $300,000 and you’d be willing to pay $320,000 for it. Rather than just write an offer for $320,000, you would write an offer that’s a little bit over what everyone else wrote. If there are five other offers and the highest one is $305,00, and you said you’d pay as much as $1,000 over any other offer, you’d pay $306,000 for the house. This way, you get the house without having to pay the full $320,000!

“An escalation clause can mean the difference between winning and losing your dream home.”

The escalation clause is a lot more complicated than what I just made it out to be, but it’s one of those things that, if used correctly, can mean the difference between winning the house and losing the house.

I’m an expert when it comes to escalation clauses, and I’d love to help you win your next bid on your next dream home. If you have any questions about this topic or our St. Louis market, don’t hesitate to give me a call or send me an email. I’d be happy to speak with you!