Question 1

What is a contingency clause in a real estate contract?

Accepted Answer

A contingency is an if–then condition that lets a buyer cancel the contract and recover the earnest money deposit if specific events—such as financing, inspection, appraisal, or clear title—are not satisfied.

Question 2

Should I waive contingencies to make my offer more competitive?

Accepted Answer

Waiving contingencies is risky. It can leave you responsible for hidden defects, low appraisals, or financing problems and may put your entire deposit at risk.

Question 3

What are the core contingencies that protect a home purchase?

Accepted Answer

The four core protections are inspection, appraisal, financing, and title contingencies. Together they help confirm the property’s condition and value, your ability to obtain a loan, and the seller’s clear ownership.

Question 4

What happens if I miss a contingency deadline?

Accepted Answer

In contracts where time is of the essence, missing a deadline can be treated as a waiver of that contingency. You may be obligated to proceed with the purchase or risk forfeiting your earnest money.

Question 5

How does an appraisal contingency protect me?

Accepted Answer

If the appraised value is lower than the purchase price, an appraisal contingency allows you to renegotiate the price, pay the difference in cash, or terminate the contract with a return of your deposit.

Question 6

What does a financing contingency cover?

Accepted Answer

It makes the purchase conditional on obtaining a mortgage on acceptable terms. If your loan is denied for reasons outside your control and you give proper notice, you can cancel without penalty.

Question 7

What does a title contingency do?

Accepted Answer

A title contingency requires the seller to deliver clear, marketable title. It guards against issues such as liens, boundary disputes, or unresolved ownership claims that would jeopardize your rights.

Question 8

Is a home warranty a substitute for an inspection contingency?

Accepted Answer

No. Home warranties cover limited repairs after closing and do not identify pre-existing or structural issues. An inspection contingency lets you discover defects and renegotiate or cancel if necessary.

Question 9

Can contingency periods be extended?

Accepted Answer

Extensions are possible only with the seller’s written consent. Timely, documented requests are essential to preserve your rights if lenders, appraisers, or inspectors need more time.

Question 10

How much earnest money is typically at risk?

Accepted Answer

Earnest money is commonly 1–3% of the purchase price, though it varies. If contingencies expire or are waived and you default, you could lose the entire deposit.

Archive

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