Understanding Real Estate Contingencies

Understanding Real Estate Contingencies

JR Mortgage Group
JR Mortgage Group
Published on June 7, 2023

Understanding Real Estate Contingencies

Purchasing a home is an exciting and significant milestone in life, but it also involves navigating through a complex process with numerous factors to consider. One crucial aspect of any real estate transaction is understanding contingencies.


What are real estate contingencies?

Real estate contingencies are conditions or clauses included in a purchase agreement that protect the interests of buyers. These clauses outline specific conditions that must be met for the transaction to proceed smoothly. Contingencies allow you to safeguard their investment by providing you with the opportunity to walk away from the deal or renegotiate if certain conditions are not met.

Common types of contingencies include:

  1. Financing Contingency: This contingency ensures that the purchase of a property is dependent on you obtaining suitable financing. It provides you with the option to cancel the agreement if you are unable to secure a mortgage loan within a specified timeframe or if the terms and conditions of the loan are unfavorable.
  2. Inspection Contingency: An inspection contingency allows you to have a professional inspection of the property to identify any potential issues or defects. If significant problems are uncovered during the inspection, you can either negotiate repairs or credits from the seller, or opt to back out of the deal altogether.
  3. Appraisal Contingency: An appraisal contingency ensures that the property’s value matches or exceeds the agreed-upon purchase price. If the appraisal comes in lower than expected, you can request a renegotiation of the price or, in some cases, terminate the contract.
  4. Sale Contingency: This contingency protects you if you need to sell your current home before finalizing the purchase of a new one. It gives you a certain period to sell your existing property, allowing you to proceed with the purchase if the sale is successful.


Why do contingencies matter?

Real estate contingencies play a vital role in protecting your interests and mitigating potential risks. Here’s why they matter:

  1. Risk Mitigation: Contingencies provide an essential layer of protection. They allow purchasers to conduct due diligence by inspecting the property and ensuring it meets their requirements. In the event of unfavorable inspection results or financing issues, contingencies provide an opportunity to back out of the agreement, reducing the risk of buying a property with unforeseen problems.
  2. Negotiation Power: Contingencies empower you to negotiate with sellers. If issues are discovered during inspections or appraisals, you can request repairs, credits, or price adjustments. Without contingencies, you might be stuck with unforeseen expenses or trapped in a deal that does not align with your expectations.
  3. Flexibility: Real estate contingencies offer you flexibility during the purchase process. They allow you to proceed with confidence, knowing that you have options if unforeseen circumstances arise. Contingencies can also alleviate the pressure of selling a current home before purchasing a new one, providing peace of mind and reducing stress.
  4. Time for Due Diligence: By incorporating contingencies, you are given a designated period to conduct thorough inspections, research the property’s history, and assess its value. This timeframe allows you to make informed decisions based on accurate information, contributing to a smoother and more secure transaction.



Real estate contingencies are an integral part of the homebuying process, offering you protection, negotiation power, flexibility, and time for due diligence. By understanding the different types of contingencies and their significance, you can make informed decisions and mitigate risks effectively.

An experienced real estate agent will be able to guide you through these contingencies and help negotiate on your behalf with sellers to assure you get the best-case scenario for your home purchase. If you are looking for an experienced agent, or looking to get pre-approved on a home, our licensed mortgage loan originators here at JR Mortgage Group can help!

JR Mortgage Group
JR Mortgage Group Wichita Kansas
Click to Call or Text:
(316) 247-9639

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