Escalation Clauses?

Asked by JoAnn Pomatto-Gomez, Santa Barbara, CA Wed Feb 13, 2013

Any realtors out there using escalation clauses when in multiple offer situations? Feedback?

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Debra (Debbi…, Agent, Livingston, NJ
Fri Feb 15, 2013
@Albert: "When representing a buyer, agents sometimes.... (only sometimes??) .... want to get the buyer the property for a low price despite their fiduciary duty to the seller as a sub agent."

A buyer's agent in CA is a sub-agent of the seller?

How can one be called a "buyer's agent", yet have a fiduciary responsibility to the seller?
Isn't that contradictory.......then why be called a buyer's agent if that doesn't impart any kind of fiduciary responsibility?

That is most confusing to NJ we no longer recognize are either a buyer's agent, a seller's agent or a disclosed dual agent if the opportunity arises.
1 vote
Debra (Debbi…, Agent, Livingston, NJ
Wed Feb 13, 2013
I don't like them - never did....

and the 2 times (way in the past) a buyer's agent presented that option, my sellers both rejected it, and were turned off by the concept......they said, basically............... if the people want the house, let them make an offer on their own, not off the backs of other buyers!

I tend to agree with those sentiments
1 vote
Bill Gassett, Agent, Hopkinton, MA
Mon Jul 24, 2017
The comment below echo my beliefs that so many real estate agents are clueless when it comes to an escalation clause. An escalation clause is used for the buyers benefit in a bidding war - the end result of which is the seller getting an exceptional price for their property.

There are many things to understand as an agent, buyer and seller when it comes to using an escalation clause. Take a look at the detailed reference at Maximum Real Estate Exposure that explains in detail the pros and cons of the escalation clause.
0 votes
Debra (Debbi…, Agent, Livingston, NJ
Fri Feb 15, 2013
Hi Al..........all is well here in NJ - thanks for asking!

For the record, I'm not brave, so no need to salute me...... nor was I giving out advice(please note the 4 question marks used in my response)

I was truly confused as to how one could be a designated buyer's agent, and still have a fiduciary responsibility to the seller - so that's why I asked - "asked" being the operative word..............actually, I am still confused, but it doesn't really matter, as I am 3000 miles away (plus, being in a state of confusion is something most post menopausal women learn to live with! ).

I learn a lot by hanging around the Trulia hallways........
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Al Goldberg, Agent, Beverly Hills, CA
Fri Feb 15, 2013
Hi Debbie,

How is my friend from NJ where my Dad was born & I have several relatives living throughout the state?

If you send me your email I will scan 6 pages of the three different agency disclosure explaining the sub agency, and with the civil code. If you want this changed you must go to the California State Legislature. Honest fair dealing and good faith are some items that both the buyers agent and sellers agent must act with, as well as the sub agency. Maybe were still in the dark ages compared to NJ.

I have no idea how they do it in NJ, but except for the four states I have been licensed in or passed the test, I do my best to never give advice out of state like what to do in NJ from California since I am not licensed there. If someone does take my advice in a state I am not licensed in (Unless they are out of state owners with California property.) they could possibly should the advice I give be wrong and cause them damages, come against me in a court of law. I am sure you are very knowledgeable in risk management, and I salute you for your bravery.

May you sell $1,000,000,000 in real estate in one or more of the next ten years.


Al Goldberg Broker
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Tina Lam, Agent, San Jose, CA
Fri Feb 15, 2013
I've not bothered trying that in the Bay Area. For quality properties, even buyers who are stretched to their limits aren't able to win the bids.
Web Reference:
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Albert Woost…, Agent, Sarasota, FL
Thu Feb 14, 2013
I have used them (never successfully) in the past but stopped because the banks (in REO situation) don't like them, as I found out when I lost a deal that I would have won if I just went in with a straight bid.
They are best used with normal deals with multiple bids.
Escalation clause is written with the parameters spelled out in the additional terms ie: Total price offered is $250,000 or $1000 higher than next highest bidder up to but not over $262,000.
The idea being that if some other bidder is offering $260K your bid would win at $261,000 automatically and cut through to multiple bidder process. I honestly have not seen this work for years since most of these situations are bank owned or foreclosure situations and they don't play that game.
Best bet is to talk to the listing agent prior to submitting the offer and ask if the seller would consider or allow this kind of bid.
Hope this help a little.

Albert Wooster
Sarasota, FL Realtor
Allen Real Estate Services, Inc.
(941) 350-1220
0 votes
Al Goldberg, Agent, Beverly Hills, CA
Thu Feb 14, 2013
In real estate the agent sometimes wheres two hats or more. When representing a seller they want to get the most possible for the property for the seller. When representing a buyer, agents sometimes want to get the buyer the property for a low price despite their fiduciary duty to the seller as a sub agent.

In the question you ask, are you buying a property or selling a property?



Albert Goldberg Broker
30+ Years Experience
Making Real Estate Fun
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