Escalation clause
A clause in an offer that automatically raises the buyer's price by a set amount above any competing offer, up to a cap. Common in fast markets. Sellers sometimes ask for proof of the competing offer.
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Free to set up. No credit card.Part 1 of 4
Why a seller cares
It is a buyer's way of bidding without knowing the other bids, and it tells you exactly how high they will go. The cap is their real number; the offer price is the opening.
Part 2 of 4
A simple example
An offer at $300,000 with an escalation of $2,000 over any competing offer, capped at $315,000. A second offer arrives at $308,000.
| The competing offer | What the escalating offer becomes |
|---|---|
| $308,000 | $310,000, and the buyer usually asks to see the $308,000 offer |
| $314,000 | $315,000, the cap; the clause stops there |
| $320,000 | Nothing changes; the escalating buyer is capped below it |
The escalation price is set by the other offers, and the cap is the only number the buyer chose.
Part 3 of 4
What people get wrong
That the cap is what you get. You get a step above the next best offer, and proof of that offer is usually part of the deal.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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