Contingency

A contingency is a "what if" clause built into a purchase contract. It says: "This deal will go forward, but only if this condition is met."

Common contingencies include the inspection contingency (the buyer must be satisfied with the home's condition), the financing contingency (the buyer must be approved for their mortgage), and the appraisal contingency (the home must appraise at or near the purchase price).

Contingencies protect buyers. If a contingency isn't satisfied (say, the home has major undisclosed problems in the inspection), the buyer can typically exit the deal and recover their earnest money.

Contingencies are some of the most important protections in a real estate transaction. They define the conditions under which a buyer can walk away without penalty.

In competitive markets, buyers sometimes offer fewer contingencies to make their offer more attractive. This can work in a buyer's favor but also increases risk: if something unexpected comes up, they may not have a clean exit.

Understanding which contingencies are standard in your market, and what you're giving up if you waive them, is an important conversation to have with your agent before making an offer.

A buyer makes an offer with a standard inspection contingency. During the inspection period, the inspector finds a failing HVAC system that would cost $8,000 to replace. The buyer requests a credit from the seller. The seller refuses. Because the buyer has an inspection contingency, they're able to exit the contract and receive their earnest money back.

"Waiving a contingency means the deal is stronger, always."

Waiving contingencies does make an offer more attractive to sellers, but it also removes legal protections for buyers. A waived inspection contingency means you accept the home as-is, even if there are significant problems. Decide thoughtfully, not just to compete.