As the spring market nears inventory in the Charlotte, NC. market is very limited currently. It has led to multiple offer situations on a lot of homes in highly desirable neighborhoods that are priced to sell. So, you are in one of those situations and do not want to lose the house in a bidding war; however do not want to bid yourself to high and leave money on the table. Is there a happy median that can help you get the house you want and at a price you are willing to pay in a multiple offer situation? Potentially yes.
The normal procedure is that the listing agent will send out an e-mail to all the buyer's agents that have placed an offer on the house asking for their highest and best offer by a set deadline. After that deadline all the offers are presented to the seller to which they pick one to go forward with on the transaction. Generally that offer will be one that offers the seller the highest return in terms of money in their pocket. You want the house but do not want to over bid and at the same time do not want to under bid on the house....So what do you do to entice the seller to take your offer?
Well I had a recent situation where this happened and was quite surprised at the offer and the seller actually was amicable to accepting it based on the terms. Come to find out others in my office have been trying this recently also with good results as well.
It is called an escalator clause. It needs to be drafted by an attorney do to the legal ramifications with it and as Realtors we are not allowed to draft legal documents....I have a blank one I am now using prepared for me that is fill in the blanks. What is says in essence is that X dollars is our offer. (Note that I did not say highest and best offer). However; the buyer is willing to pay X dollars ABOVE the highest and best offer you receive as long as that number does not exceed X dollars.
So, you have a dollar amount in mind you are willing to go up to base on advice from your Realtor and comparable out there coupled with your mortgage approval. But do not want to go to high and feel if someone wants to overbid for the house let them have it because as I tell buyers if it does not appraise then that number is fruitless.... But do not want to lose the house for your number at the same time.
This clause protects you from over paying for the house but allows you to bid on the house up to a certain amount of money you feel comfortable with at the same time. It is a win win situation. If you get the house ti may be only a few thousand more than your offer but could be tens of thousands dollars less than the highest other offer. Because you do not know who the other bidder is and they may not be in love with the house enough to go that high or cannot go beyond a certain point or a slew of other reasons..... This protects you form drastically over paying and allows you to be competitive with your bid.
This clause has helped me win a bid that we ended up paying less than what we would have paid for the house if we put in our max bid by 15% last month....So you do not know if your do not try. But the one caveat is you need to ensure your Realtor can convey this properly to the listing agent so they understand how your bid works and you do not get thrown out for a misunderstanding....
Helen Adams Realty