# Contingency

> A contingency is a condition in a home purchase contract that must be met for the sale to go ahead, such as a satisfactory inspection, an appraisal at or above the price, or loan approval, each with its own deadline.

Also called: contingency clause. Topic: Buying a home.

Contingencies are a buyer’s exits. If a condition isn’t met by its deadline, the contract usually lets you renegotiate or cancel and get your [earnest money](https://brokerandagent.com/glossary/earnest-money) back.

## What are the most common contingencies?

An [inspection contingency](https://brokerandagent.com/glossary#inspection-contingency) lets you have the home inspected and ask for repairs, ask for a credit or cancel if you don’t like what turns up. A [financing contingency](https://brokerandagent.com/glossary#financing-contingency) lets you cancel if your loan doesn’t come through. An [appraisal contingency](https://brokerandagent.com/glossary#appraisal-contingency) lets you renegotiate or cancel if the home appraises below the price.

A [home sale contingency](https://brokerandagent.com/glossary#home-sale-contingency) makes your purchase depend on selling your current home. Others cover the title, a condo or homeowners association’s documents, or getting insurance. Which ones exist, and what they’re called, depends on your state’s standard contract.

## How do contingency deadlines work?

Each contingency has a window, usually counted from the day the contract is accepted. Some contracts require you to act before the deadline, by sending a notice or a repair request; if you don’t, the contingency may be treated as satisfied. Others require you to remove it in writing.

Know which kind your contract uses. A [contingency removal](https://brokerandagent.com/glossary#contingency-removal) is often a formal signed document, and once you sign it you usually can’t use that exit again.

## What happens if a contingency isn’t met?

Usually you have choices: cancel and get your deposit back, negotiate a lower price, repairs or a credit, or go ahead anyway. Writing about low appraisals, the CFPB notes that the cost of cancelling depends on the terms of your purchase contract.

Sellers protect themselves too. A seller who accepts a home sale contingency may add a [kick-out clause](https://brokerandagent.com/glossary#kick-out-clause) so they can keep marketing the home and take a better offer if one arrives.

## Should you waive contingencies?

In competitive markets, buyers sometimes waive or shorten contingencies to make an offer stronger. It can work, but it shifts risk to you. Waive the appraisal contingency and you may have to cover an [appraisal gap](https://brokerandagent.com/glossary/appraisal-gap) in cash. Waive financing and a loan problem could cost you your deposit.

A middle path is to keep the protection and shorten the timeline, such as a quick inspection window. Your agent, and a real estate attorney where that’s customary, can tell you what’s normal locally.

## Do FHA loans have a built-in contingency?

In effect, for the appraisal. HUD generally requires FHA purchase contracts to include an “amendatory clause” stating that the buyer doesn’t have to complete the purchase or forfeit earnest money unless the appraised value is at least the price. The buyer can still choose to go ahead. See [FHA loan](https://brokerandagent.com/glossary/fha-loan).

## A sample contingency timeline

| | |
| --- | --- |
| Day 0 | Contract accepted, earnest money due soon after |
| Day 10 | Inspection contingency ends |
| Day 21 | Appraisal contingency ends |
| Day 30 | Financing contingency ends |
| Day 35 | Final walkthrough and closing |

These days are an illustration. Your contract sets the real ones, and the defaults differ by state and by form.

## Common mistakes

- Assuming a contingency still protects you after its deadline has passed.
- Waiving the appraisal contingency without the cash to cover a gap.
- Thinking a pre-approval makes the financing contingency unnecessary.
- Not knowing whether your contract treats silence as approval or requires a written removal.

## Questions

### What does “contingent” mean on a listing?

It means the seller has accepted an offer that still has contingencies to clear. MLSs label this stage differently, such as [contingent](https://brokerandagent.com/glossary#contingent) or “active under contract,” and some sellers still accept backup offers.

### Can a seller have contingencies too?

Yes. Most contingencies protect the buyer, but a contract can include seller conditions, such as finding a replacement home before closing.

### Can you add a contingency after the contract is signed?

Only if buyer and seller both agree in writing, usually through an addendum.

## Related terms

- [Inspection contingency](https://brokerandagent.com/glossary#inspection-contingency): An inspection contingency lets a buyer have the home professionally inspected within a set period, then ask for repairs or a credit, or cancel and get their earnest money back if the findings are unacceptable.
- [Financing contingency](https://brokerandagent.com/glossary#financing-contingency): A financing contingency lets a buyer cancel a home purchase contract and recover their earnest money if they can’t get the mortgage described in the contract by a set deadline.
- [Appraisal contingency](https://brokerandagent.com/glossary#appraisal-contingency): An appraisal contingency lets a buyer renegotiate or cancel a home purchase and recover their earnest money if the home appraises for less than the agreed price, as long as they act by the deadline in the contract.
- [Home sale contingency](https://brokerandagent.com/glossary#home-sale-contingency): A home sale contingency makes a purchase depend on the buyer selling their current home by a set date. Sellers often accept one only with a kick-out clause that lets them keep taking other offers.
- [Contingency removal](https://brokerandagent.com/glossary#contingency-removal): The point when a buyer gives up a contingency, either in writing or by letting its deadline pass, depending on the contract. After that, backing out for that reason can cost the buyer their earnest money.
- [Earnest money](https://brokerandagent.com/glossary/earnest-money): Earnest money is a deposit a buyer makes after a seller accepts their offer, held by a neutral third party until closing. It counts toward the down payment and closing costs, and the buyer can lose it by breaking the contract.

## Sources

- [Legal Information Institute: Contingency](https://www.law.cornell.edu/wex/contingency)
- [CFPB: Do I have to sign at closing if I don’t like the terms?](https://www.consumerfinance.gov/ask-cfpb/at-the-mortgage-loan-closing-do-i-have-to-sign-if-i-dont-like-the-terms-en-185/)
- [CFPB: My appraisal is less than the sale price](https://www.consumerfinance.gov/ask-cfpb/my-appraisal-is-less-than-the-sale-price-what-does-that-mean-for-me-en-2007/)
- [HUD: FHA Single Family Housing Policy Handbook 4000.1](https://www.hud.gov/sites/dfiles/OCHCO/documents/4000.1hsgh.pdf)

Checked 2026-10-02 by the Broker & Agent team. General information, not legal, tax or lending advice.

Source: https://brokerandagent.com/glossary/contingency