What are contingencies?
Contingent means “depending on certain circumstances”, in other words, is a clause that buyers include in the offer on a home that allows them to back out if the terms of the clause aren't met.
Let’s look at the most common contingencies in Real Estate
- Home Inspection Contingency: allows a home inspector to assess the condition of the home, checking out all the aspects of it that might not be visible to the eye. If the inspection reveals serious flaws in the home’s condition that have been spelled out in the contract, the buyer may back out, or the buyer and seller may negotiate over who will pay for it to be fixed.
- Mortgage contingency: gives the buyer a specific period of time to secure financing
- Appraisal contingency: comes into play most often when you’re taking out a mortgage. Lenders require an appraisal to be able to offer you a mortgage for the actual worth of the property. Lenders cant offer you a mortgage that is larger than what the home is appraised for.