Escalating Things

In this episode we discuss an approach to making competitive bid situations more fair and effective for everyone.  No, it's not an auction.  It's simpler and getting more and more popular in the Prescott real estate market.

what’s up what’s going on folks randall and diane bro here uh we are so excited to have our next little episode of prescott pickle lady press completely [Music] yeah that’s what we like to do we have a lot of fun and sometimes i’m out in a store and somebody will come up to me and say are you the pickle lady yes i am and i’m like what did i do and they’re like oh my gosh i watch your windows i love them they make me laugh and i’ve learned a lot so some are interesting some are just fun some we try to educate you but we try to bring something to the table every time every time every time this time we’re talking about escalation escalation clause weren’t used too much uh two years ago didn’t have to yeah a contract with an escalation clause and a lot of times the agent would call me back and say what is this what does it mean but in this crazy moment everyone’s learned about escalation it’s heavily employed heavily employed so just say very important just so you know an escalation clause uh so so you you offer a certain price on a house and then you have an escalation clause so let’s say you offer you know five hundred thousand dollars on a home and you are in you expect that you’re going to be in a competitive situation you definitely want the house but you don’t want to pay more than let’s say 550. so you could do an escalation clause you know i will beat uh you know we will beat any offer uh by a thousand dollars up to and including 550 000. and so that way if there are other offers that are less than 550 you’ll get it and you only have to pay a thousand dollars over the best alternative offer right and so it kind of it takes a static situation and turns it into kind of an auction correct yeah and people will get you know multiple off what we at one point we’re getting you know tons and tons of offers on we might get 10 offers on one house and like three of them will have an escalation right and that kind of separates you out of the others and gives you a little bit more winning room like okay somebody came in at five 550 but you have an escalation clause to 555. so with a thousand over so you might be able to beat them out you know even by a thousand dollars which is really important yeah in this crazy market yeah in this crazy market you don’t want to pay any more than you have to right and it’s really it’s the most fair to do it as an auction uh obviously it’s better for buyers who really want the house but they don’t want to pay any more than they have to but it’s also in the best interest of sellers because a lot of people you know they don’t want to just stick their necks out and offer a whole lot of money but they are willing to participate in what would be an auction and if they feel oh yes it was very competitive and i do have to do my top dollar they feel uh they feel comfortable doing that right a lot of people like some some agents uh some listing agents will say no escalation clauses and i really believe that is a disservice to their sellers because you know our experience is a lot of buyers will say well in that case i’m not gonna i’m not gonna offer anything uh even even buyers who really have a lot of money to spend like they could be the top offer right but they’re not willing to just go 100 000 over asking price without knowing how competitive and that is one key thing to remember so don’t be alarmed if you do an escalation clause and you say okay um i’m going to put an offer in a 490. i’m willing to escalate a thousand over 500 000 and you you you put your offer and everything and then somebody else comes along that might beat it but they have to present that other contract yes so you’re not tied into i know i said i would go up to 500 000. if the other contract you know yeah they can’t just come back and say oh no well we’re gonna take your 550. well then you’re going to show me right you know another offer for 449 right because and then you otherwise we the escalation clause doesn’t kick in and and the clause does say that it says as demonstrated by uh so don’t feel like okay i’m putting an offer in but i’m doing this escalation but i’m really kind of hooked into this escalation and i’m just going to overpay anyway not so yeah they have to present the other offer and see where that one came in yeah so in other markets where uh there are a lot of buyers present in the market at any one time let’s say phoenix a lot of people living in phoenix and buying in phoenix all at the same time auctions work in cities like that you know because everyone’s kind of there they can follow the auction um prescott you know a lot of the people who might be participating in the offers they might not be in town uh right you know auctions have not really taken off here like they have in phoenix uh but we’re doing escalation clauses it’s kind of our alternative right and i think it’s smart i think it’s a good way to do it it kind of gives you a little extra advantage a little more uh you can be a little more competitive yeah so if you’re open to it and you have a final bottom line this is really truly how i want to go sometimes it works and it works in your favor yeah and it’s a very useful tool very useful tool okay so that is our little saga on escalation they work they can be good and help you separate yourself from the the rest of the crowd okay if you guys are looking to buy a home or you’d like to list your home please feel free to reach out to randall and i yep you can find her at 713-302-1964 i also bought you a 928 number but i don’t know it yet yeah yeah not too late or reach us at piccolo 44111.com lots of online information lots of information check it out check it out let’s go i’m checking you up yeah i’m checking you out right now i’m escalating yeah okay that is all for today’s lesson and we hope to see you next week absolutely