Texas Escalation Clauses & Austin Real Estate

What is an Escalation Clause?

An escalation clause is a contract provision where the buyer offers one price (which is lower) but stipulates that they will increase this price by some amount if another, higher offer is received, typically with some price cap.

Sample Escalation Clause:

Buyer offers to pay $____ for the home, but if the seller receives a bona fide offer that is higher, buyer will increase the price to $____ above the amount of the other offer.
In most instances, we do not recommend adding an escalation clause to your contract. Why?
  1. They are not the norm in our market

    Escalation clauses are the norm in many markets, which means that listing agents & sellers in those markets understand and expect them. In Austin, escalation clauses are not the norm. This means that many listing agents & sellers are skeptical of this unfamiliar provision. Because of this, escalation clauses can actually work against you if you are competing with a comparable contract with standard terms.
  2. The Texas Real Estate Commission (TREC) warns against them

    TREC has instructed agents & brokers specifically not to enter escalation clauses into special provisions & instructs that any escalation clause must be written by an attorney. Many TREC licensed instructors warn against using an escalation clause under any circumstance. This can cause listing agents to be even more skeptical of these clauses, which can work against you in a competitive situation.
  3. They are contractually ambiguous

    Most escalation clauses require that a "higher bona fide offer" exist in order for the contract to escalate in price. The problem is that "bona fide" can be up to interpretation. Texas is unique that most contracts contain an option period and a seller or listing agent could ask a friend or relative to submit a higher-priced offer with an option period. At that point, a bona fide offer has been presented and the escalation clause increases the price of your offer to that amount.
  4. They can communicate indecisiveness

    Sellers & listing agents want the highest offer & best terms in a contract that is likely to close. By offering a lower amount that can escalate to a higher amount, some people interpret that you aren't decisive or sure of your offer price. You reluctantly will pay a higher amount, but you don't really want to. This can also make a seller or listing agent skeptical of your offer.
 

What Do We Recommend?

Sellers & listing agents want to work with the highest price offer, with the tightest terms, that will close. Unfortunately, a "magic bullet" (other than price & terms) doesn't exist. We recommend that you be very thoughtful about the price that you are willing to pay for any property. That price should be one that allows you to "sleep well". If you win the property, you'll be elated, but if you don't win the property, you won't have any regrets.  

Ready To Get Started on Buying or Selling a Property in Austin, Texas?

(Required)
This field is for validation purposes and should be left unchanged.

*Don’t worry, we hate spam as much as you and would never sell or share your information. Our privacy policy is available here.

2300+ Client reviews!

I highly recommend Kiel if you’re looking to rent a place in Austin. We originally met him to look around a particular unit, and when it was not to our satisfaction, he was able to quickly take us around many more units that day. He also set up a whole day of viewings for the very next day! Within 48 hours we had done enough viewings to be confident in choosing a new home. The landlord accepted our offer and Kiel handled all of the paperwork, even stopping by our hotel to pick up the needed checks. We couldn’t be happier.
Kiel is highly organized and unlike some realtors in the Austin area, he is responsive and ready to move quickly. We were always able to contact him and never left waiting.

Kiel has your BACK!! We are so grateful to have had his guidance and knowledge while navigating the intense, frustrating and way competitive Austin rental market. He quickly picked up on our taste and designed a game plan to help us push through the clutter and get to the properties that best suited us. He was ALWAYS available to us and answered our emails, calls and texts with great speed. We’re so grateful to have had him on our search team. Because my goodness, it really is a crazy market out there!

Kiel was amazing to work with! He walked us through everything, explained anything we didn’t understand, and he is is just a great guy to work with. As a first time home buyer, his knowledge was invaluable. 10/10 would recommend!

Kiel was referred to me by a friend, and we were so pleased with his services. He jumped in and guided us through the entire process, made himself readily available for us during the whole process, checked in with us via text every step of the way, and provided any and all information we requested. As a first time home buyer, I was not totally familiar with the process. Kiel helped me through the lending process, walk through inspection and closing procedures. It was such a pleasure to work with him, and we look forward to hiring him again when we purchase our next property.

I’ve never met anyone as knowledgeable and hard working as Kiel. Everything he said he was going to do, he did it. Kiel is a very easy person to get along with. He made us comfortable with the process and also made it fun. In 5 words…HE GETS THE JOB DONE!

It was great working with Kiel. He understood what we really wanted in a home. When it came to the process of the contract, it was obvious how knowledgeable he was. He did exactly what we wanted while giving great advice.

We had the pleasure of working with Will Mackintosh as our agent, and couldn’t be happier with the experience. From start to finish, the process was incredibly smooth and easy, thanks to Will’s expertise and professionalism. He guided us every step of the way making what could have been a stressful experience surprisingly enjoyable. Will’s attention to detail and dedication to finding the perfect property for us truly stood out. We couldn’t have asked for a better agent. I highly recommend Will and Bramlett Residential to anyone buying or selling a home in the Austin area.

Danny is amazing. We are first time home buyers and knew almost nothing going in other than what we could afford. Danny is patient and had references for mortgage companies, home inspectiors and specialty inspectors. He was able to negotiate on our behalf and guided us every step of the way from our staring offer to the day of move in. Didn’t matter the time of day, Danny was always available and made sure we understood everything we were signing. Buying a home is scary especially during pandemic but Danny made it seemless and went above and beyond to take care of us. Cannot speak highly enough of Danny.

Linda is very knowledgeable in the area and really helped me (out state buyer) to learn the important facts about the home locations that I was interested in. She provided great advice as part of the negotiation. She is very professional and dedicated to taking care of her customer. She even replied to one of my texts at 2AM in the morning! I highly recommend Linda if you are looking for a very knowledgeable and experienced agent who delivers results. After the closing date she is still following up with me to answer any questions and help me with finding services to take care of my new home.

We had a great experience with agent Kasey Gilliam, both coming and going! Kasey helped us find our lovely home five years ago, then helped us sell it again when we moved back east. She knows the market and has broad experience with Austin neighborhoods and homes. We trusted her advice — and she was always available when we had questions. She and her team kept our house safe and managed what felt like a million showings. We would happily work with Kasey again if we ever return to Austin, and are happy to sing her praises!

First, Carol is warm and helpful in every way. With Carol’s help, we bought our house remotely. She gave us great guidance: “This house would be great for you. The neighborhood is good.” Her office staff was also supportive – picking up the key from the closing company; going out to the property when a workman was there. It also must be said that after so many years in the business, she knows the market very well. Carol knows her stuff.
Carson, is an outstanding Realtor. He has been our agent for the past 7 years and we have purchased two houses utilizing his expertise.. Carson is very professional and courteous always thinking of his clients needs. I strongly recommend him and know that you will be very satisfied with his services.
Click Here to Read All Reviews