When we sit down to the write the offer for your new home, I’m going to cover all of the many contingencies and provisions of the real estate contract.  There are some contingencies that are used nearly everyday and others that are hardly used at all.  Every client’s situation is a little different so remember that just because I may talk about a certain contingency here, it may not apply to you.  For instance, in the image above Radon Testing doesn’t really apply to our area because Radon is normally found where there are a lot of boulders and surface bedrock.

So let’s get started!

A contingency in a real estate contract is a condition or stipulation that must occur before you are able to close.  For example, I could write in an offer, “This contract is contingent on the sellers’ hot tub conveying with the sale of the home”.  So, in essence you could make anything a contingency but I’m going to cover the most common contingencies here.

Common Real Estate Contingencies

  • Financing – This is very common because anyone who obtains a mortgage for a home (about 88% of the country) will have a financing contingency.  This states that the buyer will have so many days to solidify their financing and become fully approved for the loan.  The contract will list how much down payment the buyer will have, the type of loan, the term of the loan, and the interest rate.  This paragraph in the contract will also state how many days the buyer can take to become fully approved.  The seller can counter anything on your offer including your finance contingency.  For instance, if you state that you’ll need 20 days to get approved the seller may counter that at 10.  If you can’t get fully approved within the time specified, you can back out of the contract by notifying the seller in writing.
  • Appraisal – If you are getting a mortgage, then an appraisal contingency is absolutely required.  It basically states that the home must appraise for at or above the agreed upon purchase price.  If the appraisal comes in below the purchase price and the seller is not willing to lower their price, then you can leave the deal.  In our area of Baldwin County, we happen to have a lot of cash buyers, especially at the beach.  In the case of a cash buyer, the buyer can also check the box for an appraisal contingency.  It’s not required for a cash buyer but it makes good business sense.
  • Home Inspection – It doesn’t matter if the home is 100 years old, 5 years old, or 2 days old, I always recommend my client pay for a home inspection.  Once I had a client who was buying a brand new home and I advised that they should get an inspection.  After looking at me funny, they decided to do it.  Low and behold, the inspector found a problem with the duct work, unbeknownst to the builder. 

    With a home inspection contingency, you specify how many days you will take to have it performed and have a notice sent back to the seller stating repairs or no repairs.  So, if you specify 10 business days, that’s how long you have to get an inspection and notify the seller of repairs.  Should you miss the 10 day mark, you are in essence, telling the seller that no repairs are necessary.  So don’t miss the date!  If you ask the seller to make certain repairs, you must specify them in detail and provide them with a copy of the inspection report.  The seller will then have 72 hours to reply to your repairs.  The seller can make all, some, or none of the repairs.  If you and the seller cannot come to an agreement and you met the timeline, you can get out of the contract.
  • Termite and Moisture – This works very much like a home inspection contingency with one difference.  If you are obtaining a loan, then the termite and moisture inspection is required by the lender and not an option.  In this case the seller must make the required repairs or you cannot get the loan, so there is no negotiation here.  You, of course can get out of the contract if the seller cannot make the required repairs.
  • Home Sale – A home sale contingency is not used very often here.  If you have to sell your home in order to buy a new home then you would have me write this fact into the contract.  It would say something like this, “The purchase of 123 North Street is contingent on the sale and closing of 456 South Street”.  Seller’s aren’t very fond of this contingency since the sale of there home is unknown.  It doesn’t give them the warm and fuzzy about the deal.  If the seller does accept the contingency, they will typically counter back stating that the home is still available to other buyers and should the seller get another offer (Buyer B), then Buyer A will have 72 hours to remove their home sale contingency or Buyer B will become the primary.

Other contingencies that may appy to you:

– Structural
– Radon
– Septic
– Lead based paint
– Private well
– Homeowner’s Association (Contingent on agreeing on…)

Although contingencies are your friend, the less you have the more your offer looks attractive to the seller.  Some of them are required of course but I do have one piece of advice for the home inspection contingency.  If you really love the home, don’t beat the seller up too much on repairs unless the repairs needed are a safety hazard.  In the beginning of your offer, you started off getting the price down as low as we could get it.  Most of the time it’s not necessary to ask the seller to replace a switch plate.  Just a thought. 

Thinking about buying a home?  Let’s get together and talk!  I want to know what you’re looking for in a new home and I’ll walk you through the process step by step.  Give me a call and we’ll hit the ground running.

Jeff Nelson
IXL Real Estate – Eastern Shore


Step 1 – Determine How Much You Can Afford

Step 2 – Choose a Realtor

Step 3 – Get Pre-Approved for Your Mortgage

Step 4 – Establish Your Needs and Wants in a Home

Step 5 – Time to Go House Hunting

Step 6 – Make an Offer

Step 7 – Get Final Approval for Your Loan

Step 8 – Contingencies, Appraisal, and Repairs

Step 9 – Utilities and Insurance

Step 10 – The Final Walk Through

Step 11 – Closing Time

This content is not the product of the National Association of REALTORS®, and may not reflect NAR's viewpoint or position on these topics and NAR does not verify the accuracy of the content.