What Is Contingencies?
Contingencies are conditions written into your purchase offer that must be satisfied for the sale to go through. If a contingency isn't met, you can back out of the deal and typically get your earnest money back. Common contingencies include inspection, appraisal, financing, and title.
Key Facts
- Inspection contingency: Back out or renegotiate if major issues are found.
- Appraisal contingency: Back out if the home appraises below the purchase price.
- Financing contingency: Back out if your loan falls through.
- Waiving contingencies makes your offer stronger but removes your safety net.
- In California, contingencies typically have specific removal deadlines.
Real-World Example
You offer $700,000 with inspection, appraisal, and financing contingencies. The inspection reveals $30,000 in foundation issues. You use your inspection contingency to cancel the deal and get your full earnest money deposit back.
Why It Matters
Contingencies are your protection in a real estate transaction. In competitive markets, some buyers waive contingencies to win bids — but this is risky. Understand each contingency and what you're giving up before removing any.
En Español
Las contingencias son condiciones escritas en tu oferta de compra que deben cumplirse para que la venta se concrete. Si una contingencia no se cumple, puedes retirarte del trato y típicamente recuperar tu depósito de buena fe. Las contingencias comunes incluyen inspección, tasación, financiamiento y título.