An escalation clause is a tool buyers use to stay competitive without overpaying upfront.

It works like this:

You make an offer at a starting price and include a clause that says you’ll automatically increase your offer by a set amount if another buyer submits a higher one — up to a maximum price you’re comfortable with.

Example:

Offer price: $600,000

Escalation: Increase by $5,000 over any competing offer

Cap: Up to $650,000

If another buyer offers $620,000, your offer automatically jumps to $625,000.

If someone offers $648,000, your offer jumps to $650,000.

Why buyers use escalation clauses:

• To stay competitive in multiple-offer situations

• To avoid wildly overbidding from the start

• To show sellers they’re serious

But here’s the ...