When you find exactly what you’re looking for, whether it’s a condo for sale in Alys Beach, land for sale in Seagrove Beach, or a home for sale in WaterColor, your Realtor® will talk to you about your purchase contract and the contingencies that need to be in it.
But what are contingencies, and how will they affect your real estate transaction?
What Are Contingencies in a Real Estate Contract?
A contingency is a condition that must be met in order for the purchase to go through. The conditions are typically put in place to protect you, the buyer, in case something goes wrong with the deal.
The most common real estate contingencies involve:
- Home inspection
The lender in a real estate transaction typically chooses an appraiser to determine the home’s fair market value. If the appraisal comes in lower than the offered price, the lender isn’t likely to fund the full amount—and with an appraisal contingency built into your contract, you have the right to walk away from the deal.
Home Inspection Contingency
Your home inspector will give you a full run-down on the home’s issues (and potential issues). If something’s wrong, you can ask the seller to fix it, adjust your offer, or even back out of the deal.
If you can’t get approval from your lender to purchase the home, you don’t want to be stuck completing the transaction. This contingency protects you and the seller from diving in with both feet when there’s no financing in place. You’ll have a certain period of time to get a loan that will cover the mortgage; if you can’t secure financing within that time frame, you can cancel the deal with your earnest money intact.