Contracts
What is the purpose of an escalation clause in a Pennsylvania real estate offer?
ATo automatically increase the asking price each month the property remains unsold
BTo allow the buyer to automatically outbid competing offers by a set increment up to a stated maximum price✓ Correct
CTo require the seller to pay escalating closing costs if settlement is delayed
DTo increase the earnest money deposit if the buyer chooses to waive the inspection contingency
Explanation
An escalation clause allows a buyer to automatically increase their offer above competing offers by a specified increment up to a stated maximum purchase price. Escalation clauses became common in Pennsylvania's competitive markets during periods of low housing inventory, particularly in the Philadelphia and Pittsburgh suburbs.
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