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There are lots of homebuyers in the market this summer, and with fewer homes for sale, it means lots of competition. If you’re a homeowner planning to make a change soon, contingencies are one aspect of buying and selling that you will need to be familiar with.

Whether you’re evaluating an offer to buy your home or crafting one to purchase another, the contingencies included in the contract can be as important as the sales price. Be sure you know what the most popular ones mean and how they can impact the transaction.


A contingency clause is a provision in a contract that details what is required to keep the agreement valid. An unmet contingency can end a contract and return the earnest money to the buyer. Without invoking a proper contingency, the seller would get to keep that money if a buyer backs out.

When buying a home, some of the most important contingencies are related to the current condition and value of the property itself. An appraisal contingency allows a buyer to withdraw from the deal if the home appraisal is low. An inspection contingency provides a short period for inspecting the property to identify potential problems and negotiate repairs or adjustments to the price.

In both cases, these are critical protections for a buyer and are unlikely to be waived. Occasionally, an experienced investor or cash purchaser may opt to forgo one or both of these contingencies.


The details of the timing of the sale are another area where contingencies are common. Buyers may want to include a home-sale contingency that delays the closing until they can sell an existing home. If their home is already under contract, this may be a minor consideration. However, without a contract in place, sellers could be stuck waiting.

These contingencies often include a specific date by which the sale must be completed to avoid such a situation. Alternatively, sellers may attempt to have a kick-out clause in the contract. This would allow them to continue marketing the property. If they receive another offer, the original buyers will face the choice of removing their home-sale contingency or canceling the contract.

On the other hand, sellers who need time to find a new home can delay closing with a home-of-choice contingency. This may be acceptable in a strong seller’s market, but traditionally buyers are typically anxious to take possession. A rent-back contingency is a similar option that provides the sellers with a pre-determined period to rent the home from the new owners after closing, giving them more time to find their next home and move out.


Some contingencies are specific to the details of the transaction. A financing contingency offers buyers a path out of the deal if the financing falls through, and their inclusion is why it can be critical to begin your home search with loan pre-qualification. A title contingency protects a buyer if liens or other issues with property ownership arise and can’t be resolved before closing.

An experienced Realtor is likely your best resource for determining which contingencies should be included in your next real estate contract. They will know what clauses are expected in your area and how they can impact the strength of an offer.

Start your home search with the confidence of a lender you can trust. Browse our website for helpful resources and to connect with a loan specialist today.

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