Houses are selling quickly and often times for over list price in our local real estate market. Things are not slowing down at all, and may not for many months.
One way you can give yourself a better chance of getting the house you want is by using an escalation clause in the contract to buy and sell. Let’s take a look at how it works.
When you are in a multiple offer situation you want the Seller to know how much you want the house. You can insert this escalation clause to put your offer price above any other offer (up to a limit that you set).
“The Purchase Price shall be $___________ higher than any other bona fide offer(s) presented to Seller on or before ___________ P.M., _________________________, 20 __. The maximum Purchase Price of this Contract shall not exceed $_________________. Upon acceptance of Contract, Listing Broker shall provide Selling Broker with a copy of all other bona fide offer(s) to establish the Purchase Price. The new loan amount shall be equal to ______% of Purchase Price. Cash at closing shall be equal to ___% of Purchase Price (less Earnest Money Deposit).”
This allows you to be $1,000 or $1,500 (or whatever number you set) above any other bona fide offer. It’s not always about money for the Seller but 95% of the time it is, so if you are the highest bidder you have a much better chance of getting that home. As a Realtor I always run a comparative market analysis for my Buyers so that they know market value of the home. In today’s market it is important to think about how much “mark up” you are willing to pay given the low inventory and stiff competition.
I’ll talk about some other ways to make your offer more attractive to Sellers in the next couple weeks. It’s time for Buyers to face the fact that it’s a Seller’s market and Buyers need to do their best to “impress” the Seller.