Understanding Contingencies: A Guide For Buyers and Sellers

BuyerSeller May 16, 2018 **When looking for homes online, home buyers might chance upon a property with a “contingent offer” status. This means that an offer has been made and accepted, but the sale is still conditional while both parties work on meeting certain criteria.** These criteria, or contingencies, are actions that must be met for a contract to become binding. Both the seller and the buyer must both agree to these terms, and it is made official by including a “contingency clause” in the real estate contract.  Whether you are a buyer or a seller, a solid understanding of contingencies is a must! Below are the 4 most common types, and what they mean for both buyers and sellers: ### **Mortgage Approval Contingency** In a lot of cases, a financing or mortgage contingency is worked into the contract to protect the buyer in case he or she is unable to obtain financing within a certain period of time. With this type of contingency, the buyer can reclaim his or her earnest money and legally walk away from the deal if the same terms and numbers stated in the contract cannot be met due to issues with financing. The contingency clause typically states a specified number of days that the buyer can secure a mortgage loan, within which he or she has the freedom to terminate or follow through with the contract—depending on whether or not financing has been successfully obtained. Sometimes, the seller may agree to a request for an extension, but buyers must make sure to also have this in writing. ### **House Sale Contingency** Anyone who is in the process of buying or selling a house knows that timing and financing can be hard to align, and this is where the house sale contingency can benefit both buyers and sellers. For buyers, this type of contingency allows buyers a specific amount of time to sell their current homes in order to finance the one they're buying. A house sale contingency may also indicate how much the current home must sell for so that he or she can afford purchasing the new home. For example, if the buyer had to accept an offer below the minimum price indicated in the contingency clause, he or she can back out of the contract without legal consequences. In a seller’s market, house sale contingencies may not be advisable, as sellers are in a privileged position to choose the strongest offer among multiple bidders. If a buyer offers to buy the house on a house sale contingency, the seller may be forced to pass up on better offers while waiting for the buyer’s house to sell. However, if it is a slow market and the seller is willing to consider a house sale contingency offer, it is in his or her best interest to accept one in which the buyer’s current house is already under contract and just waiting to close. While house sale contingencies are more commonly negotiated in the interest of the buyer, sellers who are timing a move from one house to another can make good use of this contingency as well. The clause will indicate a certain amount of time for the seller to find a new house and get that home under contract before finalizing the sale and turnover of the current house. ### **Inspection Contingency** With an inspection contingency, the buyer reserves the right to perform due diligence on a house before finalizing the sale. This is done with a comprehensive inspection of the home, which is performed by a professional on behalf of the buyer within a specified time period. The terms may vary, and the buyer has several courses of action depending on the inspection report: - Approve the report and follow through with the purchase - Refuse to buy the home if certain agreed upon standards are not met, have earnest money returned - Perform a follow-up inspection if certain areas need to be examined further - Ask the seller to perform the necessary repairs before proceeding with the sale - Request a price reduction equivalent to the estimated cost of repairs The seller may refuse to cover the repair costs, in which case the buyer may freely back out of the sale and refund his or her earnest money deposit. ### **Appraisal Contingency** An appraisal contingency helps make sure that the buyer will be paying for the fair-market value of the home. If the property’s appraised value turns out to be lower than the asking price, the buyer reserves the right to back out of the contract and have his or her earnest money returned. However, an appraisal contingency may also include terms that will allow the buyer to push through with the sale even if the appraised value comes in below the listing price. In some cases, sellers may offer the house at a lower price just to seal the deal. It is common practice in hot markets for home buyers to waive this contingency in order to strengthen their offers. In such cases, buyers need to be prepared to pay for the difference in cash, since most lenders will only put up the amount for the appraised cost. Here is a sample scenario from [realtor.com](https://www.realtor.com/advice/buy/what-is-a-contingent-offer/ "realtor.com (opens in new tab)"): _“For example, let’s say you have a loan that covers 90% and you need to put 10% down for a home selling for $500,000. If the house is appraised at $475,000, the lender is only going to cover 90 percent of that appraised value, or $427,500. And instead of a $50,000 down payment, you would be expected to put down $72,500 to cover the difference. Waiving this contingency can be a gamble.”_ * * * At the beginning of any transaction in real estate, both buyers and sellers can propose almost any kind of contingency. This does not mean that all will be accepted, and there may be few negotiations to end up with a compromise. Contingencies must always be agreed to by both parties, and must always be put in writing. Negotiations can get tricky though, and it's always best to have a professional real estate agent guiding you at all times. #### Suggested Blogs [  **A 7-Step Practical Guide to Unpacking Efficiently After A Move**](https://www.thelahomegirl.com/blog/2025/12/4/7-step-practical-guide-to-unpacking-efficiently-after-a-move)[ ![Your Home Buyer Wants To Extend The Closing Date—What Now? [PART 2]](https://images.squarespace-cdn.com/content/v1/6232407a6c2de53e2ee0e1e1/1764096268147-RXMGL97P9GPZTA1JKCAR/banner.jpg?format=200w) **Your Home Buyer Wants To Extend The Closing Date—What Now? \[PART 2\]**](https://www.thelahomegirl.com/blog/2025/11/25/your-home-buyer-wants-to-extend-the-closing-date-part-2)[ ![Your Home Buyer Wants To Extend The Closing Date—What Now? [PART 1]](https://images.squarespace-cdn.com/content/v1/6232407a6c2de53e2ee0e1e1/1763491701972-VF63KRJKGI5ZU8GLNFTR/banner.jpg?format=200w) **Your Home Buyer Wants To Extend The Closing Date—What Now? \[PART 1\]**](https://www.thelahomegirl.com/blog/2025/11/18/your-home-buyer-wants-to-extend-the-closing-date-what-now-part-1)[  **Biggest Home Inspection Red Flags To Look Out For Before Buying**](https://www.thelahomegirl.com/blog/2025/10/24/biggest-home-inspection-red-flags-to-look-out-for-before-buying)[  **5 Budget-Friendly Home Improvement Projects Perfect to Tackle This Fall**](https://www.thelahomegirl.com/blog/2025/10/6/budget-friendly-home-improvement-projects-perfect-to-tackle-this-fall) Edit Lead Form OPEN PAGE Optional custom content for this leadform (unique to this page) Name(required) First Name Last Name Email(required) Phone(required) By providing your cellular telephone, you are consenting to allow The LA Home Girl Team (Compass) to contact you with marketing communications via voice call, AI voice call, text message, or similar automated means. To opt out, you can reply 'stop' at any time or reply 'help' for assistance. Message and data rates may apply. Message frequency may vary. For more information see our [Privacy Policy](https://www.thelahomegirl.com/blog/2022/3/16/understanding-contingencies-a-guide-for-buyers-and-sellers#) SubmitSubmit  We are committed to respecting your right to privacy and protecting your information when you use our services. This privacy policy also describes the choices available to you regarding our use of your personal information and how you can access, update and delete this information. We want you to understand what information we gather about you, how we use it and the safeguards we have in place to protect it. This Privacy Policy applies to information collected through this website and otherwise. Your use of this website and our services, and any disputes arising from it, is subject to this Privacy Policy as well as the Terms of Use and all its dispute resolution provisions, including arbitration, limitation on damages and choice of law. This website is a general audience site and we do not knowingly collect personal information from children under the age of 13. If you have questions or concerns regarding this policy, you should first contact our website at [[email protected]](mailto:[email protected]) 1. Collection and Use of Your Personal Information We collect Personal Information from you only when you voluntarily submit it in order to obtain certain information, including without limitation (A) requests to find out more about our programs; (B) requests to contact us; and (C) requests to forward your information to one of our affiliates. We do not honor all “do not track” requests and settings. If you use any signal(s) or another mechanism(s) that provides you the ability to exercise choice regarding the collection of personally identifiable information about your online activities over time and across third-party websites or online services, we will attempt to override such signals or mechanisms. When you use our website, no other parties can collect personally identifiable information about your online activities over time and across different websites. Your choice is indicated by your settings in your web browser. A “do not track” indication sent from your web browser will not result in any tracking activity (i.e., tracking cookies) within the website to be programmatically disabled. We collect the following personal information from you: - Contact Information such as name, email address, mailing address, and phone number We use this information to: - Send you requested product or service information - Respond to customer service requests - Administer your account - Send you a newsletter - Send you marketing communications - Improve our Web site and marketing efforts - Conduct research and analysis - Display content based upon your interests Data will not be sold or shared with third parties for promotional or marketing purposes. Information collected may be used to help train AI models and approve our offerings. By clicking the Submit button, you agree to have your information shared with us and for us to initiate contact with you at the telephone number you provided using live, recorded, artificial, or AI-generated voice, mobile phone (including through automated dialing, text SMS/MMS, or pre-recorded messaging) and/or email, even if your telephone number is on a corporate, state, or the National Do Not Call Registry, and you agree to our Privacy Policy. You further represent that you have the authority to provide this consent regarding voice and text calls to the telephone number you provided. To opt out of voice call, tell the operator you no longer wish to receive voice calls. To opt out of text calls, reply “Stop”. For text messaging, you agree to only use the term “Stop” to communicate an opt out. The rights of Users We adopt this Notice to comply with the California Consumer Privacy Act of 2018 (CCPA). Any terms defined in the CCPA have the same meaning when used in this Notice. Users may exercise certain rights regarding their Data processed by the Owner. In particular, Users have the right to do the following: - **Withdraw their consent at any time.** Users have the right to withdraw consent where they have previously given their consent to the processing of their Personal Data. - **Object to processing of their Data.** Users have the right to object to the processing of their Data if the processing is carried out on a legal basis other than consent. Further details are provided in the dedicated section below. - **Access their Data.** Users have the right to learn if Data is being processed by the Owner, obtain disclosure regarding certain aspects of the processing and obtain a copy of the Data undergoing processing. - **Verify and seek rectification.** Users have the right to verify the accuracy of their Data and ask for it to be updated or corrected. - **Restrict the processing of their Data.** Restrict the processing of their Data. Users have the right, under certain circumstances, to restrict the processing of their Data. In this case, the Owner will not process their Data for any purpose other than storing it. - **Have their Personal Data deleted or otherwise removed.** Users have the right to obtain the erasure of their Data from the Owner by placing a request at the below designated support email address [[email protected]](mailto:[email protected]) including their Facebook URL, first and last name, email address and/or phone number for identification purposes, or user can also request removal of data from Ylopo by removing the "Local Home Search" app connected to the Facebook account that was used for login. Go to Facebook settings, navigate to "Apps and Websites," and find the app named "Local Home Search". Click "Remove" next to the app's name. - **Receive their Data and have it transferred to another controller.** Users have the right to receive their Data in a structured, commonly used and machine readable format and, if technically feasible, to have it transmitted to another controller without any hindrance. This provision is applicable provided that the Data is processed by automated means and that the processing is based on the User's consent, on a contract which the User is part of or on pre-contractual obligations thereof. - **Lodge a complaint.** Users have the right to bring a claim before their competent data protection authority. Details about the right to object to processing Where Personal Data is processed for a public interest, in the exercise of an official authority vested in the Owner or for the purposes of the legitimate interests pursued by the Owner, Users may object to such processing by providing a ground related to their particular situation to justify the objection. Users must know that, however, should their Personal Data be processed for direct marketing purposes, they can object to that processing at any time without providing any justification. To learn, whether the Owner is processing Personal Data for direct marketing purposes, Users may refer to the relevant sections of this document. How to exercise these rights Any requests to exercise User rights can be directed to the Owner through the contact details provided in this document. These requests can be exercised free of charge and will be addressed by the Owner as early as possible and always within one month. We may provide this information in a standardized format that is not specific to you. The designated email address for these requests is [[email protected]](mailto:[email protected]) Consent to Receiving Emails, Auto-Dialing & Auto-Texting: By registering, you are giving us, and our professional real estate clients and advertisers permission to contact you via text message, email, or telephone using the email address and/or telephone number that you have provided during the registration process. Such contact may, from time to time, include attempts to contact you via auto-dialing, prerecorded or artificial voice, or auto-texting technology. You may opt out of receiving these forms of communication by unsubscribing from any email communication or texting STOP as a reply to one of our text communications. There is no fee charged by us or its advertisers to receive text messages, however, your mobile service provider may charge you for sending and/or receiving text messages and air-time, as well as any other standard applicable rates charged by your mobile service provider. Information Sharing We may share your personal information with and any other business associated with this site, in the ways that are described in this Privacy Statement. We may provide your personal information to our subcontractors in support of our services, such as customer service. These companies are authorized to use your personal information as is necessary to provide these services to you. We may also disclose your personal information: - As required by law such as to comply with a subpoena, or similar legal process. - When we believe in good faith that disclosure is necessary to protect our rights, protect your safety or the safety of others, investigate fraud or respond to a government request, - To any other third party with your prior consent to do so. Cookies and Other Tracking Technologies We may use cookies, for example, to keep track of your preferences and profile information. Cookies are also used to collect general usage and volume statistical information that does not include personal information. We may use another company to place cookies on your computer to collect non-personally identifiable information to compile aggregated statistics for us about visitors to our site. Links to Other Web Sites Our Site includes links to other Websites whose privacy practices may differ from ours. If you submit personal information to any of those sites, your information is governed by their privacy policy statements. We encourage you to carefully read the privacy statement of any Web site you visit. Security The security of your personal information is important to us. We follow generally accepted industry standards to protect the personal information submitted to us, both during transmission and once we receive it. No method of transmission over the internet, or method of electronic storage is 100% secure, however. Therefore, we cannot guarantee its absolute security. If you have any questions about the security of our Web site, you can contact our website and advertising provider [[email protected]](mailto:[email protected]) Special Notice to California Residents. If you are a resident of California, in addition to the rights set forth in this Privacy Policy: 1. We will not share any personal information about you to the extent prohibited by applicable California law or to the extent your prior consent to share is required by applicable California law; and 2. You have the right to request information from us regarding the manner in which we share certain categories of information with third parties for their direct marketing purposes. California law gives you the right to send us a request at a designated address to receive the following information - the categories of information we disclosed to third parties for their direct marketing purposes during the preceding calendar year - the names and addresses of the third parties that received that information; and - if the nature of the third party's business cannot be determined from their name, examples of the products or services marketed. Additional Policy Information Our Web site includes Widgets, which are interactive mini-programs that run on our site to provide specific services from another company (e.g. displaying the news, opinions, music, etc.). Personal information, such as your email address, may be collected through the Widget. Cookies may also be set by the Widget to enable it to function properly. Information collected by this Widget is governed by the privacy policy of the company that created it. Our Web site offers publicly accessible blogs, social media, or community forums such as Facebook, Twitter, or Google Plus. You should be aware that any information you provide in these areas may be read, collected, and used by others who access them. Visiting our Websites From Outside the United States. This Privacy Policy is intended to cover collection of information on our websites from residents of the United States. If you are visiting our websites from outside the United States, please be aware that your information may be transferred to, stored and processed in the United States where our servers are located and our central database is operated. The data protection and other laws of the United States and other countries might not be as comprehensive as those in your country. By using our services, you understand that your information may be transferred to our facilities and those third parties with whom we share it as described in this Privacy Policy. No Rights of Third Parties. This Privacy Policy does not create rights enforceable by third parties or require disclosure of any personal information relating to users of our websites. Notification of Privacy Policy Statement Changes We may update this privacy statement to reflect changes to our information practices or changes in regulations governing privacy. If we make any material changes we will notify you by email (sent to the email address specified in your account) or by means of a notice on this Site prior to the change becoming effective. We encourage you to periodically review this page for the latest information on our privacy practices. This Privacy Policy was last revised on June 2, 2025. We reserve the right to modify or amend this policy at any time by posting the revised Privacy Policy on the website. reCAPTCHA Recaptcha requires verification. [Privacy](https://www.google.com/intl/en/policies/privacy/) - [Terms](https://www.google.com/intl/en/policies/terms/) protected by **reCAPTCHA** [Privacy](https://www.google.com/intl/en/policies/privacy/) - [Terms](https://www.google.com/intl/en/policies/terms/) BESbswy BESbswy BESbswy BESbswy