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.
The Idaho Price Escalation Addendum to Agreement of Sale is a legal document used in real estate transactions in the state of Idaho. It is designed to address and mitigate the potential risks associated with fluctuating real estate prices. This addendum is applicable when both the buyer and seller agree to include it in their contract and when they want to establish a mechanism to protect against price increases. The purpose of the Idaho Price Escalation Addendum is to provide a fair and transparent process for resolving price escalations during the period between the signing of the agreement and the closing of the sale. This is particularly relevant in a competitive real estate market where there is a likelihood of multiple offers on a property. There are several types of Idaho Price Escalation Addendum to Agreement of Sale, each with its own specific details and conditions. Here are the most common types: 1. Fixed Percentage Escalation: This type of addendum allows the buyer to specify a predetermined percentage by which they are willing to increase their offer if a competing offer exceeds their initial bid. For example, if the buyer sets the escalation at 5%, and another offer comes in $10,000 higher, the buyer's offer would increase automatically by $500 (5% of $10,000) to remain competitive. 2. Cap Amount Escalation: In this case, the buyer establishes a maximum amount they are willing to pay for the property. If a competing offer exceeds this cap, the buyer's offer will not be escalated any further. This gives the buyer some control over how much they are willing to pay while still remaining competitive. 3. Net Escalation: This addendum type takes into consideration the net price the seller will receive after deducting any seller concessions, closing costs, or other agreed-upon credits. In this case, the escalation is based on the net price, ensuring that the buyer's escalation offer reflects the actual amount the seller will receive. 4. Escalation with Appraisal Gap Coverage: This type of addendum provides additional protection to the buyer in case the property appraisal comes in lower than the offer price. If the appraisal gap exceeds a certain threshold, the escalation clause is triggered, allowing the buyer to increase their offer up to a predetermined limit. It is essential to consult with a real estate professional or attorney to ensure that the Idaho Price Escalation Addendum is drafted correctly and adheres to the specific laws and regulations of the state. By utilizing this addendum, both buyers and sellers can navigate the competitive real estate market with more confidence and transparency.
