Ask A Realtor: How do I compete with multiple offers?

284 Eagle Crest Road, A, Edwards | Located on East Lake Creek with unobstructed mountain views, this thoughtfully designed, 4 bed/3 bath, 2,814 sq. ft. home at 284 Eagle Crest Road #A in Edwards offers an ideal mix of indoor and outdoor living spaces as well as a newly built separate fitness center off the oversized two-car garage. The home sold for $1.805M in April 2021 following multiple offers. 

Dear Craig and Rick, 

I am looking to buy a home in Eagle County and have read about multiple offers and escalation clauses. Realizing it’s a tight market, I’m interested in your input on the best approach for submitting an offer and how the escalation clause process works.   

—Curious Buyer 

973 Yorkview Drive, Gypsum | Perched above the Eagle River in Gypsum, this 2, 126 sq. ft. 3 bed/3.5 bath, four-story Victorian-style home offers sweeping mountain and river views in a quiet neighborhood. The home is scheduled to close in the next week, significantly above the list price of $449,000.   

Dear Curious Buyer,  

While there are some indicators the market may be stabilizing, both in Eagle County and other markets, multiple offers are still very present. We are seeing unsolicited offers being presented to homeowners in a variety of price ranges and particularly in the under $1M range.

Many transactions are still taking place prior to coming to the market. For a while, buyers were making offers on properties even if the home was nowhere near what they needed or wanted. Buyers now appear to be scrutinizing their options/purchases more carefully.   

Some sellers are still being aggressive and outpricing the market all together, which has contributed to some of the stabilization and in some cases, an increase in days on the market. 

Well-priced properties, including special ones in the higher price points with a desirable location, all have the potential to be involved in multiple offers and include an escalation clause if the offer is to be taken seriously.  

Escalation clauses are often used to help a buyer stand out in their initial offer and improve their chances of having their initial offer selected. This value perception can occur in the sub $1M market or on multi-million-dollar properties. 

If today’s market value is perceived to be less than list price, most buyers–and brokers–are savvy enough not to get in a bid war and the property will sit rather than sell.  

There are three factors to consider on whether to include an escalation clause:   

• Starting price 
• Increasing offer differential to remain competitive 
• Cap price 

Determining whether to include an escalation clause can be subjective and depends on several different factors, including: 

• Past experience and missing out on a previous purchase attempt. 
• Top consideration for a first offer – Including an escalation clause conveys a serious offer and hopefully avoids competing a second time for highest and best offer against other buyers. 
• Asking price – If the initial offer came in at above asking price, there may be some unwillingness to go much higher. In most cases, there is a cap to the price a buyer is willing to and should go 

Working with an experienced broker who can educate you on how to accurately go into the escalation process is important.

A broker can also be the voice of reason and make sure you stay within your comfort zone, also known as “acceptable price for this property for this specific buyer.” 

If you do not consider all three factors, the escalation clause you use will most likely not be the one that gets the attention of the seller.  

683 Eagle Crest Road, Edwards | Located at 683 Eagle Crest Road in the Lake Creek area of Edwards, this 4 bed/3 bath, 3,867 sq. ft. home offers an idyllic setting and expansive mountain views. Currently under contract, it was listed for $1.699M. The offer under contract was chosen from multiple offers, several of which included escalation clauses. 

Recommended best practices 

Recommended best practices when submitting an offer is to go in with your best foot forward. This may mean coming in above asking price, including an escalation clause or other clauses, and limiting other contingencies. 

If you have continually lost out on offers, waiving inspections or other contingencies might be the difference between winning and losing. 

Stay within your own comfort zone. If someone is willing to pay tens, or even hundreds of thousands of dollars more than you think a home is worth, let them. 

Trust the advice of your broker and trust the advice in your own head. You can dramatically overpay for a home. If a home is the home of all homes and answers all of your needs and wants, then it might be worth it. Just be confident with your decision.  

Good luck in your search, 

Craig & Rick 

Craig Denton and Rick Messmer are 46- and 25-year Vail Valley residents respectively, and award-winning managing brokers with locally owned Berkshire Hathaway HomeServices Colorado Properties. Craig specializes in the resort/luxury market including Vail, Beaver Creek, Arrowhead, Singletree, and Cordillera. Rick’s knowledge and experience spans from East Vail to Down Valley, with a specific focus on Eagle, Eagle Ranch and Gypsum, including ranch properties. Both are consistently ranked among the top producing Brokers and teams at the local and national levels.  Craig can be reached at 970-376-0087 or craig@vaildenton.com and Rick at 970-376-0041 or rick@bhhsvail.net.