What is an Escalation Clause?
You and your buyers may think adding an escalation clause to Special Provisions is a great way to ensure your buyer’s offer is accepted. Such a clause changes the buyer’s offered purchase price based on outside variables. For example, an escalation clause could say a buyer will pay $1,000 more than any other offer.
So you’ve been doing research, and you’ve decided you need one. A realtor, in the state of Texas, is not allowed to draft or assist in the creation of an Escalation Clause. You need a licensed attorney to help you. This is where I come in.
Escalation clauses are a binding addendum to the offer your realtor is planning to submit. If you are wanting an escalation clause included with your offer then you would need to come to Brandi Wolfe Law, PLLC to draft one.
What is needed for an escalation clause?
I will need to be sent an email including the full legal names of both the buyers and sellers.
I will need the address that the offer is being made on.
I will need the increment that you want your offer to go up. For example, if you want to initially bid 250,000, but someone bids $251,000… what do you want your automatic bid increment to be? If you tell me $1,000 then that means your bid automatically goes to $252,000. If you tell me you want it to go up $3,000 then your bid automatically goes to $254,000.
I also need to be given any option language that you are including in your contract. I also need to be told what your maximum payout is. This will allow me to create an escalation clause that suits you and your desires for purchase.
There is no guarantee that the sellers will agree and pay. You are purchasing an escalation clause to present to the sellers with your offer. If the sellers sign, it becomes a binding contract. Brandi Wolfe Law, PLLC, in no way, shape or form has control over whether or not the seller agrees to sign.
