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    What is a Price Escalation Clause?

    What is a price escalation clause?

    This clause let’s a home buyer say, “I will pay X price for this home but if the seller receives another offer that is better than mine, I’m willing to increase my offer by X price. However, it should not exceed X price.” NOTE: This is done in stepped dollar increments frequently by $250, $500, or $1,000 up to the buyer’s ceiling price.

    Here’s an example:

    Buyer A offers $100,000 on a home with a rider that states, in the case of multiple offers; increase Buyer A’s offer by $1,000 and the maximum escalation is $110,000.

    If no other buyers put in an offer, Buyer A’s offer stands at $100,000. However, let’s say another buyer comes along…Buyer B. Buyer B puts in an offer at $105,000. Buyer A’s offer automatically goes up to $106,000. If another buyer, Buyer C, puts in an offer at $110,000, Buyer A would not have the best offer as their escalation rider topped at $110,000.

    Why use a price escalation clause?

    This clause protects a client from overpaying AND also makes you a bit more appealing in a competitive offer situation. It states that you are only paying X amount more than the next highest offer and ONLY kicks in when other offers are not contingent on anything. It also protects the client as it gives the buyer a better chance of saving money and prevents them from having to go up to the highest bid.

    Not every agent (or seller) will allow a price escalation clause.  In fact, most bank owned properties will not.  In the state of PA, if a seller takes advantage of the price escalation clause they must then provide a copy of the competing offer so that you can rest assured that the price escalation is fair.

    When to use a price escalation clause?

    Price escalation addendums are used during multiple offer situations and lets the seller know the buyers are really serious about pursing the  home. Remember, you should never pay more than what you are comfortable with. Also, keep in mind that in order for a price escalation rider to kick in the sellers have to show us the other offers. That way we know for sure the other offers exist. IMPORTANT: Even if the price escalation is taken advantage of, the home still has to appraise at value.  IF the home does not appraise at the increased sales price then the appraisal cut has to be negotiated between seller and buyer.  Either the seller takes the hit, the buyer brings extra cash to table, or they split it down the middle.

    Need more clarification? Contact us me at 717.963.0016 or homesalesinyourarea@gmail.com.

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    Gina Casner

    In 2016, I began my tenure in real estate as a licensed Executive Assistant for a leading real estate training coach and subsequently for high-producing real estate teams. I very quickly fell in love with real estate and by 2019, I transitioned into personally helping clients turn their dreams into keys. After dozens of transactions, I have been dubbed the “unicorn hunter,” finding out-of-the-box solutions for clients looking for a home with unique requirements. In addition to managing my real estate practice, I am involved in providing community education on responsible home ownership through my exclusive Path to Home Ownership workshop series. I also am the founder of Chronically Strong, an organization that promotes mental health awareness and suicide prevention in our local communities. I take a holistic and individualized approach to real estate. Buying or selling a home in Central PA can be complex, sophisticated and often a deeply personal endeavor. Your experience should mimic the high level of customer service all of my clients have, while being very specific to your own individual needs. I work with a team of experts to provide a full, complete experience that only a cohesive team can consistently provide. Working with us, you will be given personal attention in every aspect of your home buying and selling experience with the professionalism and consistency of a thoughtful business model. And yes, superior results will follow! On a personal note, I attribute my success not only to my passion for helping clients execute on their next “big move”, but also to my knowledge regarding the psychology of buying and selling. My clientele works in diverse industries with an emphasis on technology, finance, medicine, law, and business. My real estate practice has grown successfully and consistently thanks to the repeat business of happy clients and their introductions to friends, family and neighbors. This track record is only possible because we deliver both results AND an enjoyable experience. Growing up, my family moved frequently all across the continental U.S., but you will hear me say that I am from California because that is the longest place that I lived during my formative years. Moving became a way of life for my family and each place I lived became a part of my story. It taught me that our home truly is the foundation of everything in our lives, and it is this belief that compels me to work hard for my clients when they are buying or selling their home. In many ways, our home becomes a part of our identity, an identity and memory that should be honored. I have been accused of being tenacious and super honest. I like to win (for my clients) but do so with a calm demeanor and a smile. I live in a raised ranch home in Lower Paxton Township with my main squeeze, my teenage son, and our very spoiled dog, Ginger. I have mad faith, and truly believe that each and every one of us is capable of great things. I graduated from Penn State University with a Bachelors’ in Sociology. There is a running joke in my family that every day I go to real estate school because every day my clients teach me something new. I continually invest time, money and thought into the latest sales, marketing and negotiation techniques. Why? Because I believe that you deserve to have the best working for you. I want to live life on my own terms, and am committed to helping you do the same. Would you like to work together? Please reach out. I look forward to hearing from you! Gina

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