Contracts
An 'escalation clause' in a purchase offer allows the buyer to:
AAutomatically cancel the contract if the price increases
BAutomatically increase their offer by a set amount above competing offers, up to a maximum✓ Correct
CRequire the seller to escalate disclosures
DIncrease the inspection period
Explanation
An escalation clause automatically increases the buyer's offer by a specified amount above competing offers, up to a set maximum price. It is used in competitive markets to help buyers win against multiple offers.
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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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