How to Handle Contingencies in a Purchase Offer

21 May 2025

Buying a home is an exciting journey, but it’s also one of the biggest financial decisions you'll ever make. That’s why contingencies in a purchase offer play a crucial role—they're like your safety net, ensuring you don’t end up in a deal that could become a nightmare.

So, how do you navigate these contingencies without making the seller run for the hills? Let’s break it down step by step so you can craft a strong yet protective offer.

What Are Contingencies in a Purchase Offer?

Think of contingencies as conditions that must be met for the home sale to go through. If these conditions aren’t satisfied, you can walk away from the deal (often with your earnest money still in your pocket).

A well-structured offer benefits both buyers and sellers. Buyers get protection, and sellers get a clear outline of what needs to be met to close the deal smoothly.

Common Types of Contingencies

Not all contingencies are created equal. Some are essential, while others depend on the buyer’s situation. Let’s dive into the most common ones:

1. Financing Contingency

Unless you're paying cash, you’ll likely need a mortgage. A financing contingency ensures that if you can’t secure a loan, you’re not forced to buy the home.

✔ Why it matters: This is crucial if you’re relying on lender approval. If your loan falls through, you don’t want to be stuck in a contract you can’t afford.

💡 Pro tip: Get pre-approved before house hunting. Sellers take you more seriously when they know you have financing lined up.

2. Home Inspection Contingency

This gives you the right to inspect the property and request repairs (or walk away) if significant issues are uncovered.

✔ Why it matters: Structural problems, mold, or faulty wiring can turn your dream home into a money pit. You need to know what you're walking into.

💡 Pro tip: Always hire a professional home inspector. It’s worth every penny to avoid hidden surprises.

3. Appraisal Contingency

Your lender will likely require an appraisal to confirm the home’s value. If the appraisal comes in lower than the agreed price, this contingency allows you to renegotiate or back out.

✔ Why it matters: No one wants to overpay for a property. If the home appraises lower than expected, you could be forced to cover the difference or rethink your offer.

💡 Pro tip: If you're in a competitive market, consider waiving this, but only if you’re prepared to pay extra out-of-pocket if needed.

4. Sale of Existing Home Contingency

If you’re selling your current home while buying a new one, this contingency allows you to back out if your existing property doesn’t sell in time.

✔ Why it matters: Without this, you risk being stuck with two mortgages—or worse, no home at all.

💡 Pro tip: Houses that require this contingency can be less attractive to sellers, so if you can, try to sell first before making an offer.

5. Clear Title Contingency

A title search ensures that there are no legal claims, unpaid taxes, or ownership disputes attached to the property. A clear title protects the buyer from future headaches.

✔ Why it matters: You don’t want to buy a home only to find out someone else has a financial or legal claim over it.

💡 Pro tip: Work with a reputable title company to ensure no hidden surprises pop up later.

How to Handle Contingencies Without Scaring Off Sellers

Sellers want a smooth, hassle-free transaction. Too many contingencies can make your offer look risky, leading them to choose another buyer. Here’s how to keep your contingencies without making your offer unattractive.

1. Prioritize the Most Important Contingencies

Not every contingency is necessary for every home purchase. Stick to the ones that truly matter to your situation.

For example:
- If you're paying cash, you don’t need a financing contingency.
- If you're buying a newly-built home, a home inspection might not be as critical as with an older house.

2. Set Reasonable Timeframes

Long contingency periods can delay the sale, frustrating sellers. Make sure your contingency deadlines are reasonable.

✔ Financing contingency: 21 days or less is standard
✔ Inspection contingency: 7–10 days should be enough
✔ Appraisal contingency: Typically within 14 days

The quicker you can get through these steps, the more appealing your offer will be.

3. Offer a Larger Earnest Money Deposit

Earnest money is a good-faith deposit showing you’re serious. If your offer includes contingencies, increasing your deposit can reassure the seller that you still mean business.

💡 Example: If the standard in your market is 1%, consider offering 2%–3% to stand out.

4. Be Flexible on Closing Dates

If a seller needs a quick closing (or more time to move out), accommodating their timeline can make a big difference, especially if your offer includes contingencies.

💡 Example: If the seller is relocating for a job, offer to close quickly. If they need time to find a new home, be willing to extend the closing date.

5. Use a Personal Letter to Strengthen Your Offer

In competitive markets, sending a heartfelt letter to the seller can give you an edge. Explain why you love the home and how you envision your future there.

Why it works: Sellers often have an emotional attachment to their home. Showing them you’ll cherish it can sometimes tip the scales in your favor.

When Should You Waive Contingencies?

In a hot seller’s market, buyers sometimes waive contingencies to make their offer more attractive. But should you?

- Waiving the home inspection = Risky unless you're buying new construction or know the home well.
- Waiving the appraisal = Consider only if you’re financially prepared to cover the difference.
- Waiving the financing contingency = Safe only if you have absolute lender approval.

If you're thinking about waiving a contingency, consult your real estate agent or attorney to understand the risks fully.

The Bottom Line

Handling contingencies in a purchase offer is all about balance. You need to protect yourself while making your offer appealing to sellers.

Stick to the essentials, keep your deadlines tight, and show the seller you’re serious. At the end of the day, contingencies are there to give you peace of mind—so use them wisely!