When you submit an offer as a buyer, you can protect yourself by including contingencies on your offer. Read on to develop a stronger understanding of what types of contingencies exist. Use the infographic below to help tackle questions like:
- What are real estate contingencies? / What is a buyer contingency?
- What types of contingencies exist?
- Which contingencies should I include on my offer?
- What is an appraisal contingency?
- What is an inspection contingency?
- What is a loan contingency?
Understanding Contingencies
When you submit an offer as a buyer, you can protect yourself by including contingencies on your offer.
Contingencies are conditions that must be met in order for your offer to successfully make it through to closing. If you include contingencies and they are not met, you will be able to back out of your offer and get your deposit back.
Talk to your agent about which contingencies to include and the timeline in which they should be met.
The most common types of contingencies:
Appraisal Contingency: If included, you agree to purchase this home as long as the home appraises for a certain value stated in your offer (typically the purchase price).
Inspection Contingency: If included, you agree to purchase the home as long as you, as a buyer, are satisfied with inspection reports and disclosures.
Loan Contingency: If you include a loan contingency, you agree to purchase the home as long as your loan is fully approved. Although you have gotten a mortgage pre-approval, a lender will move your application through the application process once your offer is accepted.
You can include one contingency, all contingencies, or no contingencies. Each situation is different and the most important thing is that you understand and feel comfortable with the risks.
