The clause automatically raises your offer by a set increment above any competing bid, up to a stated maximum, so the seller sees your top number as soon as a genuine competing offer is proven. The Saskatchewan Real Estate Commission requires that increment and maximum be written into the offer like any other term, and that transparency can win a multiple-offer situation cleanly, but it removes the negotiating room a flat offer preserves.
It only works as intended if the seller's side actually proves a competing offer exists rather than simply claiming one, so ask specifically how that proof will be shown before you rely on the clause. Real Broker SK Ltd.'s standard offer forms include this mechanism, but using it well is a negotiating decision, not a form-filling one.
Joel Dyck will tell you plainly whether your specific situation calls for one instead of defaulting to a template. Get your hand-reviewed valuation from Joel Dyck.