Escalation Clauses: A Little-Known Bidding-War Strategy
In red-hot real-estate markets, some buyers use escalation clauses to automatically increase their offers; but the strategy has risks
For home buyers locked in a heated bidding war, there is one weapon that may help ensure victory: an escalation clause.
It’s an addendum to a real-estate contract, typically when the offer is made, in which a prospective buyer says, “I will pay X dollars for this house, but if another buyer submits a verifiable bid that’s higher, I will raise my offer in increments of Y dollars to a maximum price of Z.”
These...