Contingency Offers: A Buyer’s Safety Net in U.S. Real Estate

Answer

When you put an offer on a home, you might include a contingency clause to protect yourself. A contingency offer gives buyers a chance to back out or renegotiate if certain conditions aren’t met—helping you avoid costly surprises during the homebuying process.

Here are the most common types of contingencies:

• Inspection Contingency: Allows a buyer to have the property professionally inspected (typically within 7–10 days). If major issues surface, you can request repairs, credits, or even walk away.
• Financing Contingency: Gives you time (often 21–30 days) to secure a mortgage. If your loan falls through, you can cancel the contract without losing your earnest money.
• Appraisal Contingency: Ensures the home appraises for at least the purchase price. If the appraisal comes in low, you can renegotiate the price or exit the deal.
• Title Contingency: Verifies the property title is clear of liens or disputes. Title companies typically complete searches within 7–14 days.
• Sale of Current Home Contingency: Lets you sell your existing home before closing on the new one. This can extend your timeline but reduces financial strain.

Use contingencies strategically. Including too many or overly long windows can make your offer less competitive in a hot market. Discuss with your real estate agent which clauses best balance protection and market appeal.

Key factors to remember:

• Deadline dates matter—missing a contingency deadline can waive your protections.
• Your earnest money deposit stays secure if you act in good faith under the contingency terms.
• Contingencies must be clearly written in the purchase agreement to be enforceable.

Before finalizing your offer, consider consulting reliable sources such as the U.S. Department of Housing and Urban Development or the National Association of Realtors® for sample contingency language.

Including the right contingencies can save you thousands and prevent legal headaches. Buyers are recommended to verify deadlines, costs, and wording with a licensed real estate agent or attorney before signing any contract.