Everyone appreciates the backspace cursor on a keyboard. Misspell something? Delete. Unnecessary word or paragraph? Delete. Now imagine if you had a backspace for the real world- thankfully you already have one. Contingencies in real estate provide a way for one or both parties to back out of a contract if certain specified requirements are not met. This is why it is important to fully understand the most common types of home buying contingencies so you can be prepared to make a competitive offer that will entice sellers and protect your interests.

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What is a Real Estate Contingency?

In real estate, a contingency alludes to a clause in the purchase agreement clearly identifying an action or requirement for the contract to become legally binding. Both the seller and buyer must agree on the terms of each contingency and sign the contract prior to a legal binding. Contingency clauses safeguard sellers and buyers by giving them the authority to cancel a contract if the terms are not being met.


Not to Be Confused with Contingent Listing

Contingent listings and contingencies are often mixed up, but they are 2 very different things. A contingent listing is an on-the-market home listing that is under contract but not officially sold yet. An offer has been made and agreed upon, but before the final sale can be reached, some conditions of contingencies still need to be met.


6 Common Contingencies in Real Estate

There are numerous types of contingencies that can be added to a real estate contract, here are a few common contingencies:

Mortgage Contingency specifies a time frame in which the buyer must acquire financing to purchase the home. If the buyer does not secure funding by that deadline, they can withdraw themselves from the deal without risk of penalty and the seller can put their home back on the market for a different buyer.

Title Contingency provides the buyer the right to acquire a title search and raise any objections to the status of the property title. This must be cleared by the seller in order for the buyer to close on the title’s transfer.

Home Inspection Contingency involves the time frame the buyer is required to get the property they desire to purchase professionally inspected. The home inspection helps ensure that there are no serious issues, such as faulty electrical wiring or any structural defects. If the property has issues, and the seller decides not to repair the faults, the buyer can terminate the contract.

Sale of a Prior Home Contingency protects buyers who need the cash proceeds from the sale of their current home to be able to afford a new home. If the buyer needs to sell their current home first by the deadline indicated in the contract, but they cannot find an interested buyer, then they can escape the contract.

Appraisal Contingency protects the buyer by stipulating that the property must be appraised for the designated sales price, at a minimum, or the contract can be voided. Banks typically do not like to loan money to borrowers whose house is worth less than the cost. This contingency may also indicate that the seller can choose to reduce the cost to the appraisal value.

Homeowners Insurance Contingency requires that the buyer must apply for and obtain homeowners insurance for the property. If the buyer cannot meet the requirements, then either party can withdraw from the real estate contract. This clause is often requested by either the mortgage lender or the seller.


Real estate contingencies are extremely useful tools for buyers and sellers to utilize. These clauses allow you to make the home buying process work best for you and your situation. Always do plenty of research before choosing which contingency clause you would like to pursue. We hope that this blog was informative and helped you with your home buying process. For more information regarding contingencies in real estate, contact Metropolitan Title. Our team is here to help you.