An addendum is a thing to be added; an addition. For example, it may be used to add supplemental terms or conditions to a contract or make corrections or supply omissions to a document. An addendum is often used to supply additional terms to standardized contracts, such as leases. Addendum is singular; the plural form is addenda.
Iowa Price Escalation Addendum to Agreement of Sale
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Multi-State
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US-03254BG
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FAQ
Drawbacks of the Escalation Clause The escalation clause should only be used when the buyer knows they will face competition, because they are revealing to the seller exactly what they're willing to pay (beyond their initial offer).
Florida Realtors has just released an official Escalation Addendum for use with the Florida real estate contract (either the FR/BAR, CRSP, commercial contract, or vacant land contract). An escalation addendum, or escalation clause, states that the offer price will automatically go up if certain conditions are met.
Can a Seller Lie About Competing Offers? Something you might be worried about is a seller trying to get you up to your max bid by lying about what other buyers have offered. You can rest assured that this is not a possibility, as long as your escalation clause is properly written.
An escalation addendum is a specific form added to an offer, that speaks for you, the Buyer, and it says to the Seller, We're offering X price on your house. We'd like to buy it for that initial offer price of X2026 BUT2026 if another buyer should happen to also offer X, or more, we'll BEAT THAT OFFER!
Instead, a seller could reject the escalation clause and ask for the highest offer. Sellers who accept escalation clauses can no longer issue counteroffers to other buyers. Because buyers might not be putting in their highest offer with an escalation clause, sellers may reject it right away.
How to Structure Your Escalation ClauseThe original purchase price offer.The increments by which the offer escalates (example: $5,000)The maximum purchase price - keep in mind your pre-approval letter, because the maximum price should not exceed this (or be prepared to make up the difference in cash)
How to Structure Your Escalation ClauseThe original purchase price offer.The increments by which the offer escalates (example: $5,000)The maximum purchase price - keep in mind your pre-approval letter, because the maximum price should not exceed this (or be prepared to make up the difference in cash)
An escalation clause is only triggered if there are competing offers, so you should not include an escalation clause in your purchase offer unless you and your real estate agent are confident that there will be multiple offers. The seller is not accepting escalation clauses.
When should I use an escalation clause? You want to stand out. Including an escalation clause in your offer indicates to the seller that you are serious about buying the home, which can help your offer stand out when there are multiple interested buyers. You want to streamline the bidding process.
What Is an Escalation Clause? In real estate, an escalation clause is a clause or addendum to a real estate contract that notes the buyer is willing to raise his or her offer price if the seller receives a higher competing offer.