A buyer asks their real estate associate to include a clause in the offer stating that the buyer will pay an additional $5,000 above any other bona fide offer received, up to a maximum purchase price. What should the associate do?

Question: A buyer asks their real estate associate to include a clause in the offer stating that the buyer will pay an additional $5,000 above any other bona fide offer received, up to a maximum purchase price. What should the associate do?

Answer options: ✅ The associate should advise the buyer against using such a clause, as it is unethical and disallowed.

• The associate must include the clause if the buyer insists, but advise on potential risks.
• The associate should only include this clause if the seller's associate agrees to disclose competing offers.
• The associate should explain that such 'escalation clauses' are prohibited under RECA Rules.

Correct answer: The associate should advise the buyer against using such a clause, as it is unethical and disallowed.

Explanation: RECA Rules, Section 40.1 specifically prohibits an industry member from structuring an offer to purchase that contains an 'escalation clause' or similar term where the purchase price is determined by reference to another offer.