How to Handle Contingencies in Offers

In real estate, offers are rarely as simple as “I’ll buy your home for this price.” Most transactions involve a variety of contingencies — conditions that must be met for the deal to close. These precautions are built into contracts to protect both buyers and sellers. Understanding how to navigate contingencies can be the difference between an easy transaction and a deal that falls apart.

Whether you’re a homebuyer preparing to make an offer or a seller reviewing one, here’s what you need to know about handling contingencies effectively.

What Are Contingencies?

Contingencies are clauses in a real estate contract that make the sale conditional upon certain requirements being met. If those requirements aren’t satisfied, the buyer or seller typically has the right to cancel the contract without penalty.

The most common contingencies include:

• Home inspection contingency
• Appraisal contingency
• Financing (or mortgage) contingency
• Sale of current home contingency
• Title contingency

Each one serves a distinct function and carries its own timeframe and potential challenges.

For Buyers: How to Use Contingencies Wisely

Contingencies give you protection, but overusing them or including too many in your offer can make it less appealing — especially in a competitive market. Here’s how to strike the right balance:

1. Prioritize Your Needs

Ask yourself: What are my non-negotiables? A home inspection contingency, for example, is smart for virtually every buyer. It guarantees you won’t be stuck with a property that has hidden issues. On the other hand, if you’re buying in a hot market, waiving less necessary contingencies — such as the sale of your current home — might make your offer stronger.

2. Be Realistic with Timelines

Contingencies come with deadlines. If your financing contingency gives you 21 days to secure a loan, make sure your lender can deliver on that timeline. Setting realistic dates ensures that you’re not risking default by missing a contingency deadline.

3. Understand the Risks of Waiving Contingencies

Waiving contingencies can strengthen your offer to a seller, but it comes with potential downsides. For example, skipping a home inspection might help you win the house — but it could also leave you on the hook for costly repairs. Always consult your real estate agent to evaluate what’s worth waiving and what isn’t.

For Sellers: How to Navigate Contingent Offers

Contingent offers can feel uncertain, especially when your sale depends on the buyer’s ability to follow through. However, that doesn’t mean they’re automatically bad. Here’s how to handle them effectively:

1. Scrutinize Each Contingency

Not all contingencies are equal. A financing contingency from a pre-approved buyer with a reputable lender may be low-risk. On the other hand, a sale-of-home contingency might delay your closing indefinitely. Ask questions about each condition and its likelihood of causing delays.

2. Ask for Shorter Timelines

If you’re reviewing an offer with contingencies, see if the buyer is willing to shorten the timelines. For example, you might ask them to complete their home inspection within 5 days instead of 10. This helps keep the process moving and lowers the window for potential issues.

3. Consider a Kick-Out Clause

If a buyer includes a sale-of-home contingency, you can protect yourself by adding a kick-out clause. This allows you to keep marketing your property and move forward with a stronger offer if presented — provided the original buyer can’t remove their contingency within a set period.

Negotiating Contingencies: Tips for Both Parties

Contingencies are a part of almost every real estate transaction, but that doesn’t mean they’re set in stone. Like every part of the offer, they can be negotiated. Here are some tips for both sides:

• Keep communication open. Don’t be afraid to ask for clarification or modifications.
• Be flexible where possible. If the other side needs an extra day or two, a little patience can go a long way.
• Work with an experienced real estate agent. A realtor can help you understand the pros and cons of each contingency and craft a strategy that aligns with your goals.

Contingency Removal: The Final Step

Once a contingency is satisfied, it must be officially removed — typically through a written document. For buyers, this signals that you’re ready to move forward. For sellers, it brings you one step closer to closing.

However, if a contingency isn’t met (for example, the home doesn’t appraise at the sale price), the contract may be canceled or renegotiated. That’s why it’s important to stay organized, meet deadlines, and maintain clear communication throughout the process.

Final Thoughts

Contingencies are not just fine print — they’re essential tools that ensure a fair and secure real estate transaction. Whether you’re buying or selling, understanding how they work and how to manage them will help you feel confident throughout the process.

If you’re looking for expert guidance through the offer and negotiation process, Mahdi Salarfar is here to help. Mahdi knows the local market inside and out and is committed to helping you succeed, step by step through the entire process — contingencies included — to make sure your deal stays on track.