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!

Throughout my entire home first home-buying process Ms. Lisa Sterling was patient enough for me to come to a conclusion on what the right choice for my wife and I.

Not only did I walk away with my dream home she went above and beyond to ensure I got a great deal and took care of many tough talks between the contractor and me.

It saves a lot of headaches and time having the right representation on your side

Shaun is wonderful to work with. He helped us for an out-of-state purchase and made the process very smooth. He is very approachable , responsive on calls and texts. He goes above and beyond to help his customers. Being remote, we can totally trust and depend on him to help us with everything. We would definitely recommend him to our friends and family. Many thanks to Shaun to make this experience smooth.

Robin was an absolute pleasure to work with. As first time home buyers, she provided invaluable guidance on how to best navigate the Austin real estate market and helped curate a great selection of houses for us to look at it. She was also extremely responsive whenever we had any questions and, although we were buying the house remotely, she keep us in the loop each step along the way. Can’t recommend her highly enough!

I’d like to thank Meaghan Marks and Annette Vonahan for their teamwork in helping me find a new rental home. Annette showed me homes and Meaghan completed the deal. I didn’t think I could afford northwest Austin, but as it turns out, that is exactly where I landed! I can’t thank them enough! So very happy with the home I was able to rent and hope to stay put for a while. Thanks again, Meaghan and Annette!

I had the pleasure of happenstance working with Meaghan Marks. Initially, I was looking for a rental in the North Austin area as I was relocating. After looking through the options with Meaghan’s assistance I came to the conclusion that it was a better choice to purchase a home rather than rent. Well, Meaghan was up for the challenge of helping a CA girl (I know we are coming in droves!) look for her Texas dream home. Meaghan was on top of everything from the start… she lined up multiple homes to look at, she knows the area like the back of her hand and she listens to her client’s wants/needs with a smile on her face. When we came across the home I fell in love with she maneuvered her way from the offer to escrow to closing flawlessly. She knows the market, knows the process, and is incredibly responsive. It was a delight to work with Meaghan and I am grateful for her guidance and help in finding my new home. I will certainly find a way to work with her again when the opportunity presents itself!

I would highly recommend Meaghan as a real estate professional. I had a slightly unusual situation in that I live in Colorado and needed to sell my late mother’s home in Cedar Park, TX. Meaghan provided assistance that went well above and beyond what is expected of a realtor. She answered all my questions, responded to calls and texts promptly, and knows the Cedar Park and Austin area very well as she has lived in Texas all her life. Meaghan is professional, knowledgeable, reliable, hard-working, and very personable. Meaghan, thank you for helping make a difficult situation a little easier.

As everyone knows, the Austin market is INSANE! Especially for a first time home buyer! I can’t believe how lucky we were to have Meaghan Marks as our realtor, she walked us through everything step by stem and took extra care in making sure we understood every process.

 

We honestly looked forward to every home tour Meaghan took us on! It was such a relief knowing we had someone so smart, honest and relatable on our side. She really made the experience so fun and exciting, even at the most stressful of times.

 

Now we are in our very first home with great memories of how we got here!

 

Thanks so much Meaghan!!!

Working with Meaghan for my first home purchase made the process so easy! She is so flexible with her schedule and made it work whenever I was available. She always answered my emails promptly and answered all the questions I had every step of the way!

I have worked with Meaghan and she was great to deal with. Low pressure and yet was aggressive enough with potential sellers to get a good deal. Meaghan goes above and beyond. Will definitely deal with her and JB Goodwin again in the future.

I have worked with Meaghan on numerous real estate transactions and she has always gone above and beyond. She is professional and courteous. I wish there were more agents like Meaghan. She represents JBGoodwin Realtors extremely well.

Throughout my entire home first home-buying process Ms. Lisa Sterling was patient enough for me to come to a conclusion on what the right choice for my wife and I. Not only did I walk away with my dream home she went above and beyond to ensure I got a great deal and took care of many tough talks between the contractor and me. It saves a lot of headaches and time having the right representation on your side

Lisa Sterling helped me find my home, and I am so thankful for her patience, expertise, and insight. She went above and beyond getting me connected to a wonderful lender and helping me work through what I wanted in a home. We found the right home for me! For a first-time home buyer who was very nervous, she was the absolute best choice for a realtor.

Click Here to Read All Reviews