Real Estate Escalation Clause Form In Tarrant
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FAQ
Escalation Clauses: what has been your experience the last year? For example with a house going for $300K, you may add an escalation clause to your $325K offer saying you'll offer $10K more than any other higher offer up to a max of $355K.
Yes, escalation clauses are legal in Texas, but they must be drafted by a licensed attorney. The Texas Real Estate Commission (TREC) prohibits agents from drafting these clauses as part of real estate contracts.
The reason why sellers don't want escalation clauses is simple: It introduces the risk that they'll sell the house for less than what would be your best and final offer.
Make an offer to the seller that includes the escalation clause addendum, spelling out the original offer, with the escalation document attached. The seller will provide evidence of potential competing offers. The buyer will receive the courtesy call and may increase their offer using the escalation clause.
The reason why sellers don't want escalation clauses is simple: It introduces the risk that they'll sell the house for less than what would be your best and final offer.
If a buyer makes an offer of $400,000, an escalator clause could specify that if a higher offer comes in, the buyer will beat it by $3,000, but only up to $427,000. If an offer of $405,000 is tabled, the escalator clause would trigger a new offer of $408,000.
However, buyers need to be careful with these clauses as they can sometimes backfire. “An escalation clause needs to be in conjunction with a really good offer,” said Madani of Room Real Estate. “It's really the whole package to get your offer accepted.”
Including an escalation clause may put you at risk for paying more than what the property was appraised for. Just because someone else is making a higher offer doesn't necessarily mean the home is worth that amount.
Yes, escalation clauses are legal in Texas, but they must be drafted by a licensed attorney. The Texas Real Estate Commission (TREC) prohibits agents from drafting these clauses as part of real estate contracts.
