Definition
A provision in your offer that automatically increases your price in response to competing bids, up to a maximum limit. Escalation clauses help you remain competitive without manual revisions.
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Escalation clauses are commonly used in competitive markets where multiple offers are expected. For example, a clause might state that the buyer will pay $2,000 more than any competing offer, up to a maximum of $500,000. Escalation clauses can be an effective strategy but may concern sellers who prefer clear, straightforward offers without conditions.
Pro Tip
Use escalation clauses strategically in competitive markets, but be careful not to set your maximum price too high.
Example
The buyer's offer included an escalation clause stating she would pay $5,000 above any competing offer, up to a maximum purchase price of $480,000.