Understanding Common Real Estate Contingencies: Financing, Inspections, and More

Understanding common real estate contingencies can make or break your home buying or selling experience. You’re probably asking, “What if the loan doesn’t go through?” or “What if I find termites in the crawl space?” Totally fair questions. More people get tripped up here than you’d expect. This stuff matters. Whether you’re buying your first home or you’re seasoned in real estate—they’re the make-or-break clauses sitting quietly behind your offer letter. They protect your butt. But skip them, and you’re basically walking into a deal, blindfolded. Let’s get super clear on what real estate contingencies are… and which ones buyers (and sellers) should know by heart.

What Are Real Estate Contingencies, Really?

I know the word “contingency” sounds like something straight out of a lawyer’s notebook. But it’s pretty simple. It’s a clause in your contract that says: “This deal hinges on X, Y or Z happening.” If it doesn’t? You can walk away without losing your deposit (aka earnest money). Your job as a buyer (or seller) is to understand which of these “X, Y or Z” items protect you—and which you’re cool with waiving.

When we talk about understanding common real estate contingencies, there are a few showing up again and again:

• Financing Contingency
• Inspection Contingency
• Appraisal Contingency
• Home Sale Contingency
• Title Contingency

Each one does a different job, but they’ve all got one mission: protect your wallet until the keys are in your hand.

Financing Contingency: No Loan, No Deal

This is a must-have unless you’re paying all cash. A financing contingency says, “I’ll buy the house, but only if I can secure a mortgage.”

Picture this: You make an offer, it gets accepted. Then your lender backs out last minute—or your credit report pulls a prank. Without this clause? You could lose your earnest money deposit (we’re talking thousands).

With the financing contingency in place? You’ve got time to either find another lender or peace out clean.

Here’s how it plays out:

1. You submit your loan app.
2. You get pre-approved (not the same as fully approved).
3. Your lender underwrites (aka checks all your docs).
4. Final approval rolls through.

If any step fails within the contingency timeline (often 21 days), you can walk. No damage done.

Inspection Contingency: Check Under the Hood

Next up in understanding common real estate contingencies: the dealbreaker known as the home inspection.

Your home inspector doesn’t just walk around with a flashlight. They’re checking structural stuff, HVAC, roof, plumbing, electrical. They see things you won’t spot until it’s too late—like a cracked foundation or old knob-and-tube wiring hiding behind drywall.

With an inspection contingency, you’ve got leverage.

• You find issues? You can ask for repairs.
• Seller says no? You can re-negotiate the price.
• Too freaky to proceed? Walk away, deposit intact.

This one’s massive. Especially in older houses or flips. I’ve seen buyers get sweet deals—like $10K off—thanks to this little guy.

Appraisal Contingency: Is It Worth What You’re Paying?

Banks loan money based on the home’s appraised value—not what you emotionally decided it’s worth after binging HGTV. So, if you’re buying a place for $500K, but the appraisal says it’s worth $470K? You’ve got a $30K gap to cover. That’s where the appraisal contingency pops up. It says: “If the property doesn’t appraise at the agreed purchase price or higher, I’m out.” Without it? You might have to bring that 30K difference to the table in cash. Ouch.

Pro Move: In strong markets, some buyers waive this to win bidding wars. Just know—it’s risky unless you have deep pockets.

Home Sale Contingency: I Gotta Sell Mine First

This is where things get a little trickier. If you need to sell your current home before buying the next one, this contingency gives you that wiggle room. Sellers usually don’t love it. It adds some risk on their end. If your home sale falls apart, their deal does too. But it exists because reality is: most folks don’t have two mortgage payments worth of cushion lying around. Situation It Makes Sense: You’ve got a buyer lined up on your end, maybe even under contract. This clause gives you full protection. If you want more strategies on coordinating buys and sells, check out Timing Your Real Estate Move Right.

Title Contingency: Clear Title or Bust

You don’t want to buy a home and find out six months later that a second cousin of the original owner suddenly has a claim on the property. Yes… it happens.

This contingency lets professionals dig into public records, confirm the property’s title is clean—no hidden liens or disputes. No clean title? No deal. Simple as that. It’s one of those boring ones, but super important—especially in older homes or FSBO (For Sale By Owner) setups.

Other Contingencies That Could Pop Up

Let me shoot it straight—these are less common, but still worth knowing:

• HOA Review: Gives you time to review HOA docs to make sure they don’t restrict your lifestyle. (No RVs? No pets?)
• Lead Paint Contingency: For homes built pre-1978. You can test for lead and pull the plug.
• Radon / Mold Testing: These can either be baked into the inspection or separate if your area’s known for issues.

If you want to go deeper on HOAs, I’d check out What to Know About HOA Restrictions Before You Buy.

FAQs

1. Can I waive contingencies to win a bidding war?

So—wrap your head around understanding common real estate contingencies before you jump in. Because once you’re under contract, those little clauses? They’re everything.