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Well that's why we do highest and best here. Seller's don't have to accept escalation clauses and it isn't in their best interest to do so.
No they don't ... equally buyers don't have to accept their counter. What often happens is a bit of stand-off. I've had success with 'highest and best" - sometimes it was resubmitting the original $ amount as other parties didn't want to pursue anything further nor offer higher; seller had every opportunity to get more from us in prior round due to the escalation; and also have had great success with escalation clauses by standing one's ground. No transaction and negotiation rounds are alike, they are unique to what the situation calls for. If things didn't get off the ground, either party can re-approach the other at any time, afterall, its about meeting of the minds!
Instead of being willing to go up using an escalator clause, just offer what you would be willing to pay. With an escalator clause in place be assured that there will be offers real or fake, to get your top price. Because they can use false offers, etc., to get you up, in most states they are not even legal.
No but it makes no sense not to if you want the house and were willing to pay a certain price with an escalator clause.
There is no right or wrong or what makes sense, just does one want to get involved with them. imo they are for specific scenarios and drastic measures; a person needs to take into consideration their overall objective and comfort level. I would use them obviously to increase the likelihood that buyer will be in the primary position regarding price... and they can still retract offer too. I've had buyers accept an automatic countered cap to be done with it and avoid the bidding war; and I've had buyers too, as I described before, have pushed the counterproposal back into the seller's court and got a lower preferred price, yet the highest price scenario due to the escalation. 2 different paths, same result - under contract, everybody's happy ... seller got highest market value.
Truth is, I want that counter!! It also serves as a giveaway - set aside that it that (our) offer will be in primary position at the cap amount, but it also discloses and confirms the opportunity for the buyer can still pay lower (depending on the offer differences involved it could be alot or miniscule), so I'll reject and flush out the price and let the escalation play out to the highest of the presented offers (and if all dropped out or remained close to the original contract price, great for the buyer). I extra step can still save thousands. Conventional bidding wars are no different to escalation clauses, there may be bogus offers too, you're stopping at a determined limit but you're showing your price card upfront in an escalation clause.
Is it just me or does the idea of an escalation clause seem really stupid? It would be one thing if the top amount were put into a computer and blinded to the seller, but the way it seems to me you are just communicating the top price you are willing to pay. Why wouldn't a seller simply reject the escalation clause and counter with the max amount. It seems to me using an escalation clause guarantees you will pay your max, whereas with conventional bidding there is at least a chance you will pay less. It seems silly to communicate your top bid at the beginning of negotiations. Is there something I'm missing?
Is it just me or does the idea of an escalation clause seem really stupid? It would be one thing if the top amount were put into a computer and blinded to the seller, but the way it seems to me you are just communicating the top price you are willing to pay. Why wouldn't a seller simply reject the escalation clause and counter with the max amount. It seems to me using an escalation clause guarantees you will pay your max, whereas with conventional bidding there is at least a chance you will pay less. It seems silly to communicate your top bid at the beginning of negotiations. Is there something I'm missing?
How do you not pay your max in a multi-offer situation? The counter is usually asking for your final and best offer so your max is offered up anyway. Unless there's some way to know the amount of competing bids, you would not be able to know how much to bid otherwise...
How do you not pay your max in a multi-offer situation? The counter is usually asking for your final and best offer so your max is offered up anyway. Unless there's some way to know the amount of competing bids, you would not be able to know how much to bid otherwise...
Then what does the escalation clause do for you? It seems completely superfluous.
Then what does the escalation clause do for you? It seems completely superfluous.
Not if your highest was way above what others intend on bidding. You can save a significant amount of money it seems with a escalation clause if no one else is intending on bidding nearly as high as you.
Is it just me or does the idea of an escalation clause seem really stupid? It would be one thing if the top amount were put into a computer and blinded to the seller, but the way it seems to me you are just communicating the top price you are willing to pay. Why wouldn't a seller simply reject the escalation clause and counter with the max amount. It seems to me using an escalation clause guarantees you will pay your max, whereas with conventional bidding there is at least a chance you will pay less. It seems silly to communicate your top bid at the beginning of negotiations. Is there something I'm missing?
And why wouldn't the buyer just refuse the counter and say the original offer stands?
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