After viewing numerous homes for sale, you might sit down and narrow down the list to one that seems to be ideal for you. When you do this, your real estate agent might talk to you about adding an escalation clause in your offer. This type of clause is not extremely popular in real estate, yet there are many times when buyers use these to help them win the bidding on homes. Here are several factors you should consider if your agent suggests adding an escalation clause to the offer you are writing.

Do you understand it?

Before you decide to include an escalation clause, it is vital that you understand what it is. An escalation clause allows you to automatically increase the offer amount for the house you want to buy without you having to do so. It allows you to put in an offer and then state that you would like to increase it by a certain amount over any other offers the seller receives. You will need to include a maximum offer amount if you use an escalation clause, and you should carefully think through the amounts you want to include on the offer if you decide to add this type of clause.

What type of market is it?

Secondly, you should only consider adding an escalation clause if the market is really booming. If houses are selling quickly and buyers are fighting over them, it would be the perfect time to add an escalation clause. By doing this, you will be able to have more leverage as you try to buy a house, and it would help you compete a lot easier with all the other buyers that are out there right now.

Are you sure you are willing to pay more?

The final thing to consider is that you must be willing to pay more than your original offer if you use an escalation clause, as there is a good chance you will end up paying more for the house than the original amount you offered. You should make sure you are okay with that before adding this type of clause to your purchase offer.

If you decide that adding an escalation clause is right for you, talk to your agent to make sure you use the proper wording in it and make sure you fully understand how it may affect the amount you pay for the house you want to buy.

For more information, you will want to contact a company such as Austin Avenue Real Estate Company.