| |
| |
|
|
Real Estate |
|
Escalation Clauses - A Home Buyers Secret Weapon
Today we discuss escalation clauses because much of the country is experiencing an extreme "sellers' market." By that, I mean there are more buyers than there are sellers, and that results in sellers' getting more than one offer to buy their property. The seller can be picky about the terms under which he is willing to sell. A potential buyer is apt to make one or more offers which are rejected before making a successful offer. If you are a buyer, how do you increase the chances that your offer will be the acceptable one? The obvious things a buyer can do is to have a strong "pre-approval" lender letter, and make an offer that is full price and is as "clean" (has as few contingencies) as possible. Is there anything a buyer can do beyond that? You bet your bippy! Escalation Clauses A buyer who really wants to buy a property can do the above, plus add an "escalation clause." An escalation clause simply states that the basic offer is full price, but if the seller receives one or more other offers at full price or higher before this offer is accepted, then this offer is increased by $500, $1,000, $5,000 (or whatever figure you choose) above the other acceptable offer. Of course, you choose the amount of the incremental increase based on what you think it'll take to get the sellers' attention given the original asking price of the home. Now, I can hear you thinking, "That's all very well. I can see where that'll get me the winning bid, but how do I make sure there really is another contract? More importantly, how do I make sure I can afford the home? Isn't this awfully open ended?" Yes, it is. So let's fine tune the escalation clause idea a bit. First, make the escalation offer such that it will increase the sellers' net proceeds (not gross proceeds) by $500, $1,000 or whatever. That way, your price is not artificially increased by a higher offer that includes a provision for the sellers to pay some of the costs that are normally born by the buyer. Secondly, name an upper limit to which your offer can be carried. For example, your offer could state that you will pay the sellers an amount that will increase their net proceeds by $10,000 above any other acceptable offer up to a total price of $1,500,000. That puts a cap on how high you're willing to go. Prior to making an offer like this, be sure to have a conference with your lender to be sure you qualify for the highest amount required by your offer. Obviously, you also need to be sure you know and can pay the mortgage payments on that amount. It's also a good idea to get a lender letter for this higher amount, so that the sellers will be confident you can do what your offer says you're willing to do. The third bit of fine tuning is to require that the seller provide you with a copy of the acceptable competing contract as signed by the other potential buyer. Make sure the "buyer" isn't a relative of the seller! With the written offer on hand, you can be sure everything is on the up and up. In this hot sellers market, escalation clauses can be the key to closing a deal on your dream home. If a seller is motivated by greed, you will have them dead to rights. Raynor James is with http://www.fsboamerica.org - providing homes for sale by owner, "FSBO", properties. Are you thinking, "Should I sell my home?" Visit http://www.fsboamerica.org/seller.cfm to sell your home sale for free for one month.
MORE RESOURCES:
Real-Estate - Google News |
|
|
|
RELATED ARTICLES
FSBO Novel Preface PrefaceWe are For Sale By Owners, "FSBOs." We spend our time trying to sell ourselves and others on what we are doing or what we want to believe. According To Sellers, Silence Isnt Always Golden' When trying to sell a home, silence isn't always golden especially when you're expecting your real estate agent to call. In fact, it's one of the leading complaints among sellers in the real estate market. Be Careful - A Real Estate Agent Could Lead You Astray The real estate agent is a valuable source of potential deals for you as an investor. They have access to the multiple listing resources and of course, have a monopoly on this information so they have to be part of your game plan as an investor. Ten Steps for Becoming a Successful Real Estate Investor The secret to success in real estate investment is finding bargain properties that you can "flip" quickly for a profit. Here are a few ideas for becoming a successful investor:1) Obtain sound advice from investors who are already successful. How To Give Yourself A $20,000/Year Raise Without Asking Your Boss Why without asking your boss? Two reasons, one, he or she will most likely say no; and second, he or she will probably have you committed for asking. So what do you do. Credit Help: Buying Real Estate -- Not the Same as Buying Cars Credit for Buying Real Estate is Different than Credit for Buying CarsForget what you've been told about credit.You may be shocked at some of these tips because this information runs contrary to what other so called experts tell you. Selling Your Home - What Can Go Wrong With Pricing and Loans So, you're selling your home (house, townhouse, condo, apartment, land, lot, farm, ranch, etc.), what can go wrong? The sad fact is that a lot of things can go wrong. Tax Assessment/Appraisal: How Do I Know What My Home is Worth? If you are in the home buying or selling market, it's important to understand the difference between tax assessment and appraisal value. Concentrate on the appraisal value because this determines your asking price. Take The Guess Work Out Of Your Wholesale Property Purchases We have become very concerned by the number of readers writing to us asking how to determine which are the wholesalers(*) that can be trusted. Why are we concerned? Because when we dig a little deeper, we realize that they are buying properties based solely on the recommendation of the wholesaler. How to Make a Buyer Fall in Love with Your Home If you are thinking of selling your home, there are a number of things you can do to improve the "showability" of your home. But first, let's look at your home through the eyes of the buyer. How To Sell A Home That Didnt Sell If your home has just come off the market and hasn't sold, don't be discouraged. The reason it didn't sell may have nothing to do with your home. Buying Overseas Property Fourteen Top Tips for Overseas Property Investment:1. Buy what you want to buy. Achieving Positive Cash Flow from Your Real Estate Investments Even if you're counting on rising property values to eventually make a profit on an investment property, it's far more desirable to have a positive cash flow each month. If you're losing money on a property every month, it may not take long until your future profits will have been lost. Use Targeted Decorating To Get A Higher Price For Your House This article will show you how to sell your home quicker, get a higher price for it by using smart decorating techniques.The secret is to make your home feel like "my home", for the buyer. Selling Your Home? A Warning About Attachments Before you list you home for sale, determine what you don't want to leave behind.Our friends sold their home for full price and moved out a few days before closing. Water, Water Everywhere on the Waterfront Waterfront living is among the most desirable of locations in our area (Florida). The views and vistas are fantastic, not to mention the ability to walk out one's door to drop a line to fish or untie a line to enjoy boating. What Should I Do If My Home Isnt Selling? Suppose you've been trying to sell your home for months. You haven't had even a nibble from a prospective buyer. Investment Property - Leveraging Rental Property Equity Owning investment property is a tremendous wealth building strategy. Thousands upon thousands of individuals have amassed great wealth by investing in rental properties. Location, Location, Location Location, location, location - known as the 3 most important factors when buying a property, and it is easy to see why. The location of your property dictates how much yield you get, and how much capital growth, which ultimately decides how well you do. Minneapolis Warehouse Loft Downtown Minneapolis is rich with true metropolitan charm. With the growth of an incredible entertainment district, a wonderful artistic community, and all the opportunities of a large urban center, downtown Minneapolis is pleasantly thriving.
|
|||||||||||||||
