I'm top-posting.

Thank you for providing the additional details. It is an interesting
matter. I would like to see exactly what is at stake for a "shady" real
estate agent. With an "escalating clause", the buyer is saying that
they are willing to pay a certain price, and the real estate agents
facilitate the transaction. It could be very difficult to pin down the
crime, and ironically, even to draw much interest in it by those who
could enforce the rules. It appears that "escalating clauses" are good
for the industry in that they generate higher commissions. Anyhow,
thanks again DerbyDad for sharing the story!


On 5/2/2021 6:11 PM, DerbyDad03 wrote:
On Sunday, May 2, 2021 at 4:42:22 PM UTC-4, Bill wrote:
On 5/2/2021 3:43 PM, DerbyDad03 wrote:
Their offer was accepted, not just based on the offer price, but also
based on the appraisal clause. Another offer also had an escalation
clause that maxed out at $410K, but the appraisal clause was only
$13K above the appraisal value, $2K less than their offer. That was
close!
I'll assume my previous message has been read. Color my cynical but all
I have to say is "what a coincidence!". That said, I congratulate the
buyers on their new home. The way property is appreciating, it will
surely be a great investment in the long run, and you can live in it!

Yes, it could be shady, but part of the process is that the seller has to
show them the offer (or at least a picture thereof) that triggered the
escalation clause.

Of course, as I joked to my son "Oh, you mean the offer that the
seller's sister submitted right after they had read yours?" ;-)

The California Association of Realtors says this in a FAQ:

"Should the buyer include a provision that allows for verification
of the next highest competing offer?

Yes. Since the buyer is making an offer dependent upon the
offers of other buyers, it makes sense that the buyer should be
able to verify that those other offers were in fact bona fide offers.
The buyer may include language such as: "Seller shall, upon
acceptance, provide buyer with a copy of the highest offer received.
Buyer has a right to contact that prospective purchaser making
that offer, or his or her agent, to verify the validity of that offer and
that the other offer is in fact a bona fide offer."

While still ripe for gaming, once you start getting third parties
(especially licensed agents) involved in the scheme things can
get trickier for the schemers.

This was for a house in Indiana. My #2 son is an RE agent in
Nevada. Escalation clauses are not legal there. I'm not sure
of Nevada's exact reason, but from my reading it appears that
some jurisdictions don't allow escalation clauses in a real estate
offer because there is no firm dollar offer being made.



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