Personally I think this practice makes no sense at all. For the exact reason that Pacitia stated. Plus, did you put additional terms in that language that the seller would then have to prove to you what the next highest offer was? How do you know the seller is not going to just take you to the cleaners.
If I am the listing agent and I see an offer like that come across my desk I am for sure going to alert the seller not to take it all that seriously as there is a super high chance that a buyer making an offer like that is going to want to either cancel or not honor the "final" price.
Just offer whatever your highest and best offer is. No need for a maneuver like this. I think it hurts your offer. Bad idea.
Not everybody does it because if you do state the maximum you can afford or would like to pay your price, by stating this in your addendum --- "or $3000 over highest offer with a cap of $___" then you've basically already told them what your best and highest offer is.
So why didn't you offer that in the first place?
And what would stop the seller from countering you at that price?
All good answers here and you can see why you need to put in a maximum amount ("up to $______) so you don't go over budget. With all of the mulitple offers, Buyers and agents are just looking for an additional edge to get your offer accepted. Probably putting in your highest and best offer is the best strategy and then increasing your good faith deposit to show your sincerity.
Good luck to you!
I confess to the fact that I have used this tactic in multiple offer scenarios. I do however place a stop...'up to _________dollars.' That way you will never go above where you want to be.
It's not possible to simply rescind an accepted offer. It is, however, possible to put an upper limit on your escalation clause. Discuss it with your buyer's agent and come up with a strategy prior to crafting the wording of your escalation clause.
Vickie Nagy, Specialist in Buyer Reprsentation