Contracts
An escalation clause in a purchase offer allows the buyer to:
AAutomatically increase their offer up to a stated maximum if competing offers are received✓ Correct
BWithdraw from the contract if prices increase
CAdd additional contingencies after acceptance
DExtend the inspection period
Explanation
An escalation clause states that the buyer will beat any competing offer by a set amount, up to a specified maximum price, allowing the buyer to remain competitive in a multiple-offer situation.
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Key Terms to Know
Option Contract
A contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
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