Escalation Clause, Option Money, Appraisal Gap are Critical terms in todays Real Estate Contract

Dated: May 20 2021

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As a Buyer, How do I Win an Offer in Todays Real Estate Market? As a Seller, What should I look for in the contract to achieve the best offer?

1.) An escalation clause is when you place an offer and under the stipulations section it states that buyer will pay up to a certain amount in increments of $x amount over the highest offer.
2’) Option Money is when a buyer will add that he she will pay seller a $ amount in option $ additional to em upon acceptance of offer. This amount will be applied to the purchase price as additional EM if the house closes. If the house sale terminates, this amount is conceded to the seller.
3.) Appraisal Gap is when the buyer is stating that he she will pay a certain $ amount as the gap. This amount is the amount that the buyer will pay above the appraisal value not exceeding their offer amount.
For Buyers, These are all excellent ways a buyer can gain an edge or advantage over the competition. In this HOT Sellers market we are in, and if the home is highly sought after, it will take one if not all of these techniques to win the home. The market is certainly a sellers market as we all know and if the property is highly desired, they are some times selling quicker than agents can get them on the listing services. It is always my advice to buyers that they get pre approved prior to even looking at homes. Homes will not be available if you haven’t done this first step. When you are pre approved, you will be ready to strike on the Home of your desire.
For Sellers, These buyer techniques are extremely attractive especially the appraisal gap. Appraisals tend to vary in this aggressive market and if the property is under valued by an appraiser, the seller has the comfort that this gap will cover any shortage to achieve their highest value.
I certainly hope this helps you as a Buyer or Seller and wish you all the best.

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Jim Ligas

Thank You for Visiting! I Hope this site will bring you some assistance on Buying or Selling a Home. Home Buying or Selling can be tricky and I hope that I can bring some value to the table for you a....

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