Q: We just lost out on a house we wanted to buy because another offer had something called an escalator.

It sounds like those movable stairs in big department stores. What is that and how does it work? We thought we would get the house because we offered full price and were the first offer made. Doesn't being first count for anything?

A: I can understand your confusion. To start with, the seller is under no obligation to accept offers in any specific manner. They can even take an offer that is for less than the asking price if the terms are more acceptable to them or for any other reason. Let's say you offered full price but your offer is contingent on selling another property. Maybe the other offer was for all cash and those buyers had already sold their other home so that wasn't going to be an issue for them. Obviously the other buyer's offer is less risky for the seller.

A seller might have other concerns that are as important or more important than the price. Maybe they need extra time to move out so an offer that has a negotiable closing date is better for them. Maybe they have to close fast for tax reasons so a two week closing is their best choice even if it's for less money. Sellers can even take an offer for sentimental reasons. Maybe they have dogs and really favor an offer from a family they know also has dogs! As long as they are not discriminating against anyone who is in a protected class they can chose whomever they like.

As for what's called an "escalation clause," or sometimes an "agreement to beat highest offer addendum," this is an agreement from the purchaser that says that they will beat any offer made, up to a maximum amount. It's often used when there are competing bids on the same property. It's possible that was what happened to you. The property actually sold for more than the listed price. Consult with your agent about ways to make yourselves the winning bidder next time. Good luck!