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Jeffoneil, Home Buyer in Erie, PA

Escalation bid clause. Competative bidder.

Asked by Jeffoneil, Erie, PA Fri Jun 15, 2012

I recently bid on a house. Over the list price. I was told I was "close" but someone out bid me. I found out the next day that I was out bid by an escalation clause in the competators bid. Property was a reposession. Do I have any recource? It does not seem fair that coming to the table with a viable bid and being beat out before I even get a chance to make another offer. It's like going to the roulette table and the number is already set against you.
Unfair.

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Personally, I dislike escalation clauses and will dsicourage them from coming into play when I can. Fortunately, they are not commonplace here.

I once had a seller who agreed with my position, and when the buyer tried to insert such a clause, he had me tell the other agent he wanted to be fair to the other person who was bidding, and asked simply for a highest and best offer...with no tricky clauses...........why should someone be able to buy a house off of the back of another bidder......

and besides........what IF the other bidder had the same clause in his offer!!!
Try figuring that one out!
1 vote Thank Flag Link Fri Jun 15, 2012
The KEY, as I understand the clause;
is that the Offer Price will automatically escallate, determined by a competing Offer:

This sounds pretty slick, and underhanded, and, probably in most States, illegal!

The reason that it should be illegal is that competing bids are supposed to CONFIDENTIAL.
If someone is disclosing other offers, they would be in violation of the law.
In California, I am pretty sure that the offending Realtor would lose their license, I don't know about other States.
1 vote Thank Flag Link Fri Jun 15, 2012
Some sellers DON'T like to see those. I had one seller that thought the person who put himself out there with an honest bid at the highest he could was preferable to someone who bid lower but used the escalation. The seller accepted the slightly lower bid, proving it's not ALWAYS about the money! If the escalation amount isn't much, it won't help anyway; needs to be a good sized chunk to make a real difference, in my opinion. - Paula Kosko, Re/Max "Always helpful, never pushy."
0 votes Thank Flag Link Sat Jun 16, 2012
When writing a competing offer, I always advise that the buyer makes their "best and highest" offer. That way, if they lose it, at least they gave it their best shot. Typically, in a multiple offer situation, a seller will choose one offer over another without giving everyone a chance to counter.
Another recommendation I make, which is perfectly legal to include in a sales agreement in PA, is to include a clause or addendum stating that "Buyer agrees to increase the purchase price by $XXX over the highest offer up to a maximum sales price of $YYY." I've used it quite often in such situations with the Buyer's consent. I've won some and I've lost some. It's not a good feeling to not get the agreement signed when you've made your best offer, but such is life. Now, it would be considered unfair if you wrote your offer and you, or or agent, were never informed of the existence of a competing offer.
0 votes Thank Flag Link Fri Jun 15, 2012
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