A contingent offer remains a cornerstone of home buying. It allows buyers to commit to purchasing a property only if certain conditions are met. If those conditions aren't satisfied, the buyer can withdraw from the contract without losing their earnest money deposit or facing penalties.
Contingencies protect buyers from unforeseen issues. According to recent data from the National Association of Realtors, about 81 percent of purchase contracts include at least one contingency.
Here are three common contingencies:
Inspection contingency
This gives buyers a set period (often 7'14 days) to hire a professional inspector to evaluate the property's condition. Inspectors look for structural problems, mold, faulty wiring, plumbing leaks, or roof damage.
If significant defects are found, buyers can request repairs, negotiate a lower price, or walk away. This contingency is still nearly always recommended.
Financing contingency
This protects buyers if they can't secure a loan approval for the full amount. Buyers typically have 21'30 days to finalize their mortgage. Unexpected changes such as shifts in interest rates, credit issues, or lender requirements can derail financing.
Without this, buyers risk forfeiting their deposit if the loan falls through. It's especially relevant in 2026, with mortgage rates hovering around 6'7 percent and tighter lending standards.
Appraisal contingency
Lenders require an independent appraisal to confirm the home's value matches or exceeds the offer price. If the appraisal comes in low (common in cooling markets where prices have softened), the buyer can renegotiate, cover the gap in cash, or exit the deal.
This is critical because lenders won't fund beyond the appraised value.
