What Is an Escalation Clause | KT Confidential E132

On this podcast, episode 132, Adrian and Ariel discuss what an Escalation Clause does for homebuyers while also diving into the potential disadvantages they can bring when looking to buy a home.

With the competitive real estate market, buyers always try to find a way to one up their competitors’ offers. One of the ways they do this is by having an escalation clause in their contract.

An escalation clause in a real estate contract basically states that “I will pay X price for a home , but if the seller receives another offer higher than mine, I’m willing to increase my offer to Y price.” This allows the buyer to always be one step ahead of their competition. For example, buyer 1 offer can be 900K + an escalation of 15K. If buyer 2 offers 1M , the escalation matches that and increases it 15K so buyer 1’s offer is now 1M (original offer) + 15K.

The problem with the Escalation Clause is that it often puts distrust within the seller because all the money they are willing to spend is not being offered upfront. This leads some sellers outright declining any escalation clauses because they would simply want a proper submission of what a buyer is willing to spend.

All of that and more on KT Confidential – Real Estate Podcast.


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Adrian Trott
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The founders, Ariel Kormendy and Adrian Trott, started The Kormendy Trott Team, a real estate team based out of Halton region in Ontario, after both being in need of a change from their successful careers in the automotive industry and both experiencing the lack of service being provided in the real estate industry. They kicked off their careers in 2011 and quickly became a top-performing team in the country, ranking 17th of approximately 200 for Century 21 in 2017; as a team of just the two of them compared to much larger teams. They decided that they needed to take their team from being real estate agents in Milton to the rest of the GTA and beyond by expanding and servicing more areas. The team has since grown to have an administrative arm, media department and successful sales team operating a smooth running and successful business. Follow them on social for behind the scenes info, real estate tips, industry secrets and more.

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