Contingencies are a standard part of an offer. Contingencies mean that the sale is contingent upon certain criteria that need to be met. 

These contingencies are put in place to allow you, the buyer to to your due diligence as well as back out of a sale if something goes wrong, usually without losing your deposit. There are 3 major contingencies to consider when making an offer: home inspection, appraisal, and loan. 

Inspection Contingency. This is one of the most important as it gives the buyer the right to get the home professionally inspected. If something is not working the buyer can then request repairs, credits or walk away from the deal with their Earnest Money Deposit Intact. In fact, we advise never to waive an inspection contingency. Would you buy a used car without getting it checked by a mechanic first? You can get a list of inspectors and service providers at

Recommended Inspections:

  • General Home Inspection
  • Sewer Line
  • Fireplace (if there is one)
  • Geological (if the home is on a hillside)
  • Plumbing & Electrical (if the general inspection calls for it)
  • Foundation & Structural (if the general inspection calls for it)

Appraisal Contingency. An appraisal contingency is when a third party is hired by the mortgage lender to evaluate the fair-market value of the home. If the appraised value is less than the sales price, the appraisal contingency lets you back out of the deal. In multiple offer situations, eager buyers might feel pressured to waive an appraisal contingency, but you could end up paying more. Remember, a mortgage lender will only finance the loan up to the appraised value of the house, not the purchase price, and you will have to financially cover the rest.

Loan Contingency. Under the loan contingency, the buyer has a specified time period to obtain a loan. If the buyer can’t get the mortgage lender to commit to a loan, the buyer has the right to walk away from the sale without a penalty. Buyers are usually required to apply for financing within a specified time after signing the contract. In fact, remember you should be pre-approved when writing an offer.

As in an appraisal contingency, sometimes buyers in hot markets will risk waiving this contingency, especially if cash offers are on the table. But waiving this contingency means that if your mortgage lender delays or denies your loan, you can lose the deposit, so it’s a risky venture.

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