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Contingency Period??? The 4 Most Common Contingencies in Real Estate

The 4 most common contingencies in Real Estate transactions

If you are buying or selling a property like my clients are, you may be a little confused about a very important part of the purchase agreement, the contingency period. There are thousands of potential contingencies you may see in a purchase contract, but these 4 are by far, the most common.


This is one of the most common types of contingencies in the sale of a property. Simply put, your offer is contingent upon being able to procure financing for the property. During this time, a financial institution will dissect and review your financial status to determine if you are able to afford the property according to their guidelines. Often times the contract will specify the type of financing, the interest rate and the down payment.



This often goes hand-in-hand with the financing contingency. If a property does not appraise at least as high as the purchase price, the buyer can either:

  1. back out of the deal or;
  2. ask the seller to adjust the price down to the appraised value. If the seller declines, the buyer can then back out of the deal.



Also referred to as the “due diligence period”, this contingency says the buyer has a specified number of days (typically 17) to do whatever it takes to ensure they want to purchase the property. This is the typical time to get a home inspection, complete the appraisal inspection, or do any contractor walk through. If there is a well or septic system, they should be inspected.

If any issues turn up during this period, the buyer may ask the seller for repairs, a discount or they may just back out of the deal.

*It is important to note that the seller is not at all obligated to correct any issues uncovered during inspections. It is equally important to understand that a buyer is not obligated to purchase the property and can withdraw the offer during the contingency period and still retain their deposit.



This is gaining in popularity, as homeowners are upsizing or downsizing from their current home. This contingency allows a buyer to back out of the deal if they are unable to sell their current property to someone else. A time period is usually specified in the contract and allows the buyer so many days to market and sell his property.


The most important thing to understand with contingencies is, the deposit remains fully refundable until all contingencies are removed by the buyer in writing.

The Contingency Period can be stressful for some, but with the right team on your side, it is just a means to moving on to a successful transaction.

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