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Win a Bidding War with an Escalatory Addendum

If you’re looking to buy some real estate in today’s marketplace, you know it’s very competitive. It seems everyone is in a mad rush to buy their next home before school starts up again in early August. Currently there is much more demand than there is inventory, which means prices are being forced upward and every property will likely have multiple offers.

So, how can you win in a multiple-offer situation? Well, first of all, give your Realtor permission to tell a little bit of your personal story so that you seem more human than just a paper contract. Then be prepared to put your best offer on the table. From the seller’s perspective, most often a cash deal will trump any offer with financing simply because they can close faster. But, often cash offers are well below asking price.

So, then when the seller is comparing offers beyond cash offers, what else do they look at? The seller cares about his bottom line, how much money he’ll walk away with. So, if your offer includes asking the seller to pay some closing costs, your offer won’t be as attractive as another that has all their closing costs covered.

The last thing that is usually considered is preferred closing date. That, and any other aspect of a contract, is negotiable.

When a hot property hits the market in a hot neighborhood it can really cause a feeding frenzy. One tip to cut to the chase that many Realtors seem to forget about is the Escalatory Addendum. Some bank-owned (REO) sales won’t allow them but in most other cases you can use them. Essentially what they are is an additional piece of paper to add to the sales contract. It simply states that if a competitive offer comes in, you are hereby increasing your sales price by x amount up to x amount maximum. That quickly eliminates offers and counter-offers going back and forth.

For more info about buying real estate in the Central Florida market, please call me at 407-236-6559.