5 Common Contingencies When Buying a Home



It’s vital to understand the terms “earnest money” and “contingencies” when house hunting. Earnest money is paid up-front as a show of good faith when you make an offer on a home. It is held by an escrow company until the sale is finalized or falls through. A contingency is a condition added to a purchase offer. If that condition isn’t met, the buyer keeps their earnest money if they walk away.

Here are the five most common contingencies used by homebuyers.

  1. Appraisal: This contingency means the offer depends on a satisfactory appraisal of the property. If the appraiser decides the value of the home is much lower than the sale price, the buyer can re-negotiate or walk away.
  2. Financing: This contingency gives the buyer time to secure a home loan. It protects them in the event they cannot find a lender or do not qualify for the amount they need.
  3. Home sale: If a buyer needs to sell their current home, this contingency gives them time to do so. If they cannot sell their home, they get their earnest money back. This contingency is no longer very common, as sellers generally decline offers with it.
  4. Inspection: If the home inspection reveals any problems, this contingency gives the buyer a chance to negotiate repairs with the seller. If an agreement cannot be reached, the buyer can walk away.
  5. Title: This contingency protects the buyer if any problems arise during the title search. Common problems include contested ownership or another person’s debts needing to be paid.





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