Your Home February 14, 2022

The Top 9 Contingencies to Include in Your Offer When Purchasing a Home

If you’re a first-time homebuyer, it’s exciting — and a bit nerve-wracking — moment in your life. However, after visiting dozens of properties and eventually finding “the one,” you’re ready to make an offer.

Take the time to explore all of the potential hazards and home-buying conditions that will help protect you as a buyer before you do. For example, you should be allowed to withdraw your offer if a major repair issue has been identified, such as a crack in the foundation or a leaky roof. Though legally any contingency can be included in an offer, the following are the 9 most typical home buying contingencies to consider.

Home Inspection Contingency

You should always order a house inspection as the buyer. A skilled and accredited house inspector will check for problems with the building and home systems (such as plumbing, electrical, and HVAC) that the buyer may not see. When you buy a property that needs considerable repairs, you might face a large financial loss. The inspection contingency can safeguard you from making a bad real estate investment by allowing you to back out of the contract if a severe problem is identified.

Appraisal Contingency

An appraisal contingency protects lenders more than the homeowner, and it is nearly always needed by your lending institution if you are applying for a home loan. It verifies to your lender that the house is worth the money you’re paying for it and that if you default on your loan, they’ll be able to recover their costs by selling the house.

A good home appraisal, on the other hand, may provide you with peace of mind, knowing that you are purchasing a property with instant equity since the value is greater than your purchase offer. With an appraisal contingency in place, you may also back out of the purchase if the appraised worth of the house is less than the asking price.

Financing Contingency

A finance contingency is a condition in your offer that permits you to withdraw if you are unable to obtain a mortgage to purchase the house. Both the bank and the homebuyer are protected by the financing contingency. It allows the bank to check your financial history, income levels, and what you can truly afford, while also allowing you to decline an offer if you can’t afford it.

Home Sale Contingency

This contingency is popular for purchasers who require the equity from the sale of their existing house to purchase the next one, which normally goes toward the down payment and closing fees. Even if you have money set aside for a down payment, not every homeowner can manage to pay two mortgages while waiting to sell their present house. This allows purchasers the opportunity to pull out of the transaction if they are unable to sell their present house by a certain deadline.

Clear Title Contingency 

The property title demonstrates ownership as well as any mortgages on the property. In every real estate transaction, the title firm performs a title report on the property to ensure there are no outstanding contractor liens or judgments against it. If the report reveals any liens or judgments, the buyer may demand the seller to pay them before the closing date. If these things are not cleared prior to closing, the buyer has the option to walk away from the transaction.

Kick Out Contingency

The kick-out contingency benefits the seller by allowing them to continue promoting their home even if another contingent contract is in place. If a seller accepts an offer from a buyer who has a home sale contingency, the kick-out contingency allows the seller to accept another offer while rejecting the prior buyer’s offer. 


This eliminates the need for the home seller to wait for someone else’s house to sell before theirs may be sold. Typically, the homebuyer who made the initial offer is given a set period of time – usually a few days – to remove their house sale contingency and proceed with the purchase or walk away.

Home Insurance Contingency

Lenders ask homeowners to start home insurance coverage before the final loan is authorized as a condition of financing. This protects the house if something happens after the seller walks out but before the buyer moves in. This contingency protects the lender and allows them to reclaim the mortgage amount. If the buyer is unable to get property insurance, any party may withdraw from the transaction.

Homeowners Association (HOA) Contingency

The HOA contingency pertains to residences or condominiums that are managed by a homeowner association. It provides the homebuyers the right and opportunity to evaluate any HOA agreements and documents that may be pertinent to them as the new owners of the house. This contingency can allow them to get out of the contract if they don’t receive the paperwork on time or don’t agree with the HOA duties or limitations.

Move-In Early Contingency

If the seller agrees, this contingency permits a buyer to move into a home before the final closing. If a buyer moves in early, it is more difficult to back out of the agreement if other stipulations are not met. If the transaction fails, the seller has the right to evict the buyer. Most real estate brokers will advise the seller not to accept an offer that includes a move-in date that is earlier than the close of escrow.


Contingencies offer valuable protection to both buyers and sellers. The buyer’s contingencies shield them against a variety of unknowns concerning the home and the actual buying transaction. 


While sellers may see them as possible roadblocks, they provide an escape route if the buyer has trouble selling their present home or securing financing. Ask your real estate agent for guidance on which contingencies are ideal for your position and the current property market as you make your offer.