Home Buying in Orange County>Question Details

Marilyn Kalf…, Other/Just Looking in Santa Ana, CA

I'm a real estate reporter at the Orange County Register working on a homebuyers' strategies story. What do you think of 'escalation clauses?'

Asked by Marilyn Kalfus, Santa Ana, CA Tue Mar 19, 2013

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By the way, I am in Orange County, California, not Pittsburgh!
1 vote Thank Flag Link Tue Mar 19, 2013
I figured that out by your question. Unless there is an Orange County in PA.
Flag Tue Mar 19, 2013
It's standard practice here in Seattle. Piece of cake.
0 votes Thank Flag Link Wed Mar 20, 2013
Marilyn:

I'm a mortgage banker. I have not had to many "escalation clauses" come through on my RPA's. My problem - How can you know the sellers agent or seller is being truthful?

I have seen a lot of appraisal contingencies being waived. Nevertheless, it a double edge sword. My borrower can waive appraisal contingencies and if they don't like the final purchase price I can always "kill" the deal based on financing. However, a lot of my agents have been using our "Next Day" appraisal service to keep the transaction moving quickly. Instead of waiting 8 to 10 days we can have the appraisal done "next day". Huge perk for selling agent & seller.

The market is hot & everyone has their bag of tricks.

Best of luck.

Grant Fawcett
Mortgage Banker
Castle & Cooke Mortgage
Ph: (949)212-4578
NMLS: 832635
0 votes Thank Flag Link Wed Mar 20, 2013
Agree it can be difficult for first time home buyers to understand. I've been having buyers waive their appraisal if they really want the home.
0 votes Thank Flag Link Tue Mar 19, 2013
I don't like them. An Escalation Clause is used in a multiple offer situation where it states, Buyer will pay $x over the highest offer. Some Buyers will put a cap on the amount. The problem is now the other offers need to be disclosed to the Buyer with the Escalation Clause. Also, if other Buyers have an Escalation Clause it can be very confusing. Add to that, if one or more buyer have a Non-Disclosure on file then their offer can not be revealed to the Escalation Buyer.

You see how this can get tricky and could open up law suits.

I would recommend that buyer just put forth their best offer. The best offer isn't always the highest price. Contingencies and timeline make a huge difference, as well as the type of financing, who the lender is as well as the agent representing the Buyer.

All the best to you in your strategies story.
Web Reference: http://www.terrivellios.com
0 votes Thank Flag Link Tue Mar 19, 2013
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