Contracts
A Washington buyer's offer includes an escalation clause that states: 'Buyer will pay $5,000 more than the highest competing bona fide offer up to a maximum of $600,000.' The seller receives competing offers at $550,000 and $560,000. With the escalation clause, the buyer's effective offer is:
A$600,000 (the maximum)
B$565,000 ($560,000 + $5,000)✓ Correct
C$555,000 ($550,000 + $5,000)
D$580,000 (an estimated amount)
Explanation
The escalation clause triggers to beat the highest competing offer. The highest competing offer is $560,000.
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Key Terms to Know
Earnest Money
A 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.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
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