Contracts
An escalation clause in a purchase offer allows the buyer to:
ACancel the contract if the appraised value is below the purchase price
BAutomatically increase their offer price above competing offers up to a specified maximum✓ Correct
CExtend the closing date if financing is delayed
DReduce the purchase price if the inspection reveals defects
Explanation
An escalation clause states that the buyer will automatically increase their offer by a set amount above any competing bona fide offer, up to a maximum ceiling price. It is commonly used in competitive seller's markets to help buyers remain competitive.
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