Real Estate Matters

By Frazier Hughes

Executive Summary:

How high will you go on the offer to purchase your next home?

Frazier Hughes is with Keller Williams Realty. Reach him at frazierhughescom@ gmail.com

Escalate your way into your new home

If the house you are looking to purchase is in a great neighborhood, priced well, in decent condition, be prepared to enter a possible bidding war against other buyers. This can happen even without a housing shortage - like a recent listing of mine with multiple offers.

Most buyers will not spend over a certain amount for a number of reasons. Why? Here are a few; either because they are not approved by their bank to do so, do not want to have a house that is not worth what they paid for, or because they are thrifty. Some are okay overpaying no matter what, to get the house they want.

What can you do if you are okay with paying over the asking price, up against other buyers, but only want to spend so much? Have your realtor throw in an Escalation Clause to help you be the top bidder - but not go over the amount you want to spend.

This is what part of how it reads: “If seller receives one or more bona fide written offers to purchase the property prior to acceptance of this contract, then the purchase price shall be increased by five hundred dollars ($500.00) over the highest bona fide offer, net of concessions, received by seller, not to exceed x dollar amount.” It guarantees that you are not going over your limit of what you want to spend on the house and win the bid.

My clients will ask me “how do we prove they had another offer and are telling the truth?” Great question. Well, part of the clause also reads “Listing firm shall provide selling firm with a copy of the highest bona fide purchase offer.” This protects you and makes sure the other agent and the seller are telling the truth.

Keep this in mind, with the shortage of homes right now I am seeing clients offer anywhere from $15k-$50k or more over asking price, paying their own closing costs and get this... not get the house because they were outbid! Unbelievable? No, it's happening all across the country.

There is another part to this conversation as well. Will you pay the difference in cash if the house doesn't appraise for your offer amount? Sorry to throw that curveball at you but there is another clause for that we can discuss later.

The good news is that if you want to spend more, all you have to do it just Escalate It!