Escalation Clause

An escalation clause is a term added to a purchase offer that automatically increases your bid over competing offers, up to a maximum price you set in advance. For example, you might offer to beat any higher bona fide offer by a fixed amount, but never go above your stated cap. It is used in competitive situations with multiple offers, so you can stay in front without overpaying beyond your limit. To use one, the seller typically must show proof of the competing offer that triggered the increase. Escalation clauses are not right for every situation, and some sellers do not accept them, so weigh it against simply leading with your strongest number. Coordinate it carefully with any contingency terms in your offer.