What an escalation clause does
and when it comes up

A home that draws more than one offer forces buyers to guess: bid too low and lose it, bid too high and overpay. An escalation clause is a line in your offer that raises your price a set amount above a competing offer, up to a maximum you set.

Say a buyer offers $415,000 and adds a clause that goes $5,000 above any higher offer, up to $440,000. If another buyer offers $425,000, the first buyer's price moves to $430,000 on its own. The clause does nothing unless another offer comes in higher, and it stops at the maximum the buyer set.

There is no standard New Jersey form for an escalation clause. The wording is written into the offer itself. The buyer and their agent write the wording, so it reads differently from one offer to the next. One thing to settle in that wording: what the seller has to show to prove there is a higher offer.

What should you ask your agent? Ask whether an escalation clause fits the house you are bidding on, what top price makes sense for your budget, and how the wording should read on this offer. Nothing on this page is advice about a specific transaction.