Why Hedging an Offer in a Bidding War is a Bad Idea

Q. What do you mean by Hedging an Offer?

o We cannot keep up with the inventory below $400,000

o Many agents who put in offers knowing they face a bidding war will use a tactic called an Escalation clause –

§ I’ll pay $1000 over the highest offer up to X”

§ The idea is that the strategy ‘saves’ the buyer money so they don’t have to pay the MAX price they are willing to pay.

Q. Why these Hedge offers or you call Escalation Clauses are a bad idea

o Several reasons – let me give an example

o It puts doubt into the seller’s mind that the buyer is willing to pay that price

o Its contingent on the behavior of someone else’s offer – which the agents do not know

o Often buyers will bid a peak price that is above what an appraiser would approve – causing potential contract failures when the appraisal comes in low.

Q. We are here talking with Barb Schlinker of Your Home Sold Guaranteed Realty, you can reach Barb at 719 301 3900 or visit http://www.BarbHasTheBuyers.com.

Q. Barb: I know you have handled the sale of many homes that foreclosed, what do they do in this situation?

· Yes, we have handled hundreds of them.

· They do not accept these escalation clauses that are contingent on someone else’s offer up to X.

· Typically when they receive multiple offers, they give an offer deadline of another day or two for the buyer to bring their ‘Best and Highest Offer”

Q. What are some offer clauses that win bidding wars?

· #1 would be for the buyer to make their best offer

· If they have some extra cash – offer an appraisal guaranteed

o One recent sale which we received multiple offers had several offers that used an Escalation Clause. That meant to the seller one of the offers could not be accepted as written and needed write a counter proposal to lock in the price. That puts the deal in doubt for the seller. That home sold for $10,000 over asking price.

Q. How do people thinking of buying a home get in touch with you?

· Call our office at 719 301 3900

· http://www.BarbHasTheBuyers.com

· To Get Insider Access to Not found on Zillow or other websites:

o Private Facebook Page: Coming Soon Colorado Springs Offered by: Barb Schlinker of Your Home Sold Guaranteed Realty Colorado

7660 Goddard Street Suite 213, Colorado Springs, CO 80920
Search: Barb Schlinker Real Estate for more information