When a property receives multiple offers, some motivated buyers may try to make sure that they are the successful bidders, by putting in an "escalator" clause. This is a new development, that sometimes replaces the old standard system of going back to all bidders, and urging them to put in their highest and best offers. That can go on for more than one round, when more than one buyer is still interested, or can be stopped at any time by the sellers selecting one buyer with whom to negotiate further.
The escalator clause circumvents the old system, by including future bids in an addendum to the sales contract. For example, let's say that the home is on the market for $400,000. A buyer who expects, or is told, that there will be multiple offers may choose to offer full price, but add an escalator clause, offering to pay, say, $2000 more than the highest bidder. So, if s/he offered $400,000, and someone else offered $410,000, his/her bid will automatically adjust to $412,000. There should be, and usually is, a cap above which the buyer will not go; in this case, let's say that it's $415,000. If the cap had been $410,000, then it wouldn't be triggered, because the buyer didn't consent to go above that, and there is already a bid at that amount. If the other offer had been lower, then $410,000 might have gotten this buyer the property. Most clauses require the seller to prove the other offer, which can be done with a copy, from which the names have been redacted (crossed out).
The above paragraph may be a little hard to follow, without a specific example to plug in. The basic premise, though, is simple: you as the buyer offer to go above other offers, up to an amount named. If that offer is not triggered, you can buy for the amount on the original sales contract. If it is triggered, the amount offered under the formula stated will be inserted into the addendum, along with a copy of the other offer. In either case, the seller should get more money, and without the back and forth of multiple offers. The downside is that, when there are no other offers, the buyer who offered the escalator may feel that s/he overpaid, causing buyer's remorse. There's no perfect system, but buyers and sellers should be aware of the possibilities that are out there, and know to talk to their agents about the options they have.
