What are Contingencies? Understanding the Top 6

Once your offer is accepted by the seller, you will be asked to place an earnest money deposit of 1%-5% of the home value. To get your deposit back, you can put a few different contingencies you can include to let the seller know that your offer is conditional. These are all called “contingent offers,” and are common for first-time buyers.


1. Inspection Contingency

This is the most common contingency offer. In this case, the buyer places the offer so long as their independent inspection doesn’t reveal any new problems (not already discussed) or any problems that the seller isn’t willing to fix before the sale. Many homebuyers choose to place an offer with an inspection contingency.

2. Home Sale Contingency

Home sale contingent offers are less common. For buyers who are also moving out of a home, this offer is only valid if they are able to sell their home. If you are selling a home and foresee having a difficult time, this gives you a legal loophole to avoid buying a new one should the sales process not go as planned.

3. Closing Cost Contingency

Many new buyers will make their offers contingent on the seller covering most, if not all, of the closing costs. 

4. Financing Contingency

This contingency means that the offer is valid only if the buyer can obtain financing for the home. This is a popular contingency, for obvious reasons. If for any reason the buyer’s financing falls through, they can take back the offer and get back their earnest money.

5. Title Contingency

Title contingency offers are a wise choice for any buyer. They protect you from being backed into buying a home with an unsettled debt or with ownership problems (due to divorce, unpaid taxes, etc.). This contingency ensures you can back out if the property doesn’t have a clean title.

6. Appraisal Contingency

You can place an offer with an appraisal contingency if you want to be sure you’re getting a fair deal. In this scenario, if the appraised value of the property is less than what it is being sold for, you have the option to either rescind your offer (and get back your earnest money) or move forward and decide to cover the difference.


If the home fails one or more of these contingencies, you can cancel your offer and ask for your deposit back. If you bought a home without any contingencies, you will have to close the home or lose your deposit. Get more helpful home owner tips here!

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