Escalation Clauses in Seattle's hot market

[noah]

Originally Posted by thatguy950

Just wait for the inevitable steep dip, they have been building so much in the area and with the recent market roller coaster ride it seems to be looming, it’s happened in Seattle plenty of times in the past...just sayin

This. Everyone has a different situation but I won't be caught trying to buy a house when there is less than 1 month of inventory on the market, it's just asking for trouble unless you are 100% certain you will be holding 10+ years but even then the old adage is that you make your money in real estate when you purchase, not when you sell.

[agaace]

@homesinseattle
This thread brings me to a question. We bought last year from an unethical, dishonest seller - the seller and their agent, who was their family, lied about a number of things but that warrants a separate thread. We won with an escalation clause over another offer - so we were the highest bidder - and our offer got accepted - yay! The trouble was, the other offer we were bidding against.. got accepted by the seller before ours - long story short: the seller's agent messed up big time and accepted two offers from two buyers at the same time (of which we were the higher bidder, and the other buyer's offer was accepted like a day before ours). So we settled that the other buyer had a priority to buy and we'd be a backup offer (we *really* liked the house). The seller really wanted our $$$ though, so tried to retract their contract, and ended up essentially scaring the buyer away by being super nasty.. The other buyer walked away. So now it got to us.. we were faced with: sign the papers quickly or we won't close on time and our interest rate will go up, and we have to start over, so we just wanted our home and signed.

My question is.. in a situation where we escalate against another offer, but the other buyer ends up walking away.. does the escalation hold still? At that time, we were the backup offer and THE ONLY offer? Was it legal for the seller to still use the escalation in such a situation, or should he at that point have dropped the price back to base $$$?

Just curious. Also considering filing an official complaint against the seller's agent for her shady practices but never got to it and it may be too late for it now I guess.

[homesinseattle]

Wow agaace, really sorry that happened to you. Sounds frustrating and unsavory. Regarding the timing and validity of the escalation clause, it depends. Did you sign an official backup offer at the time the other offer was still valid? That would make your escalated price legit. If you arrangement was more loose "call me if the other offer doesn't work out", you may have an honest gripe. That being said, it still may not have legs. I'm imagining that the other agent called you and told you you had a chance, you got excited and signed. You could have said no and tried to recalibrate the price, but at that point probably didn't want to run the risk of losing to another offer.

The issue of the non disclosed items is a separate one. If it's little stuff, it may not be worthwhile to pursue as litigating costs a bundle. If it is a big deal and you truly can prove that they were hiding something, you may want to chat with an attorney. A third tact, which I have used a few times, is to coach my buyers to reach out gently by email directly to the seller, first by appealing to their sense of fairness and then if necessary hinting that you may be considering some legal action. Sometimes they will pitch in some money post closing, either from a sense of fairness or worry.

Sorry for your experience and please let me know if I can be of any more assistance.

Vince.

[Canamlian]

Originally Posted by thatguy950

Just wait for the inevitable steep dip, they have been building so much in the area and with the recent market roller coaster ride it seems to be looming, it’s happened in Seattle plenty of times in the past...just sayin

Yes, wait long enough and it’ll dip, but how much higher will it go first? Some posters on this board have been saying for 5 years, “wait for the inevitable dip and it’ll be cheaper.” When the slowdown/fall finally happens they’ll beat their chest about how they were right, but even if prices fall 20% they’ll still be 30% higher than when they first started their chant.