With inventory low and multiple offers becoming more common, more real estate agents are employing escalation clauses to help their clients win bidding wars.

However, what once was considered a secret weapon in an agent's arsenal has become a more mainstream tool.  Escalation clauses automatically increase a buyer's offer by a set amount -- typically $1,000 -- over the highest competing offer. 

Coldwell Banker agent Sarah McCarthy in Lincoln Park, Ill., recommended that her clients use an escalation clause because there were seven other bidders but was surprised that three other bidders employed the same strategy.

More buyers are agreeing to escalation clauses because of the protections they offer, as they generally have an upper-limit cap and do not kick in unless there are other legitimate, confirmed offers.  Moreover, the buyer's lender will not provide financing if the contract price is not supported by an appraisal. 

"In this market that's going crazy, people just want to know that they're not jumping all in and being crazy," says Peter Kozak, an @properties agent in Chicago.

Source: Chicago Real Estate Daily