what is a real estate contingency

What Are Real Estate Contingencies? A Simple Guide for Buyers and Sellers
Whether you’re buying your first home or selling your third, you’ve probably heard the term “contingency” thrown around. But what does it actually mean—and why is it so important in a real estate contract?

Let’s break it down in plain English.

✅ What Is a Contingency?
A contingency is a condition that must be met for a real estate transaction to move forward. Think of it as a safety net: it gives one or both parties the right to back out of the deal if certain things don’t go as planned.

Contingencies are written into the purchase agreement and protect buyers and sellers from unexpected surprises.

🏡 Common Real Estate Contingencies
Here are the most common types of contingencies you’ll see in a real estate deal:

1. Home Inspection Contingency
What it does: Gives the buyer the right to inspect the home for issues (like plumbing, roof, foundation, etc.)
Why it matters: If major problems are found, the buyer can renegotiate or walk away.
2. Financing (Mortgage) Contingency
What it does: Protects the buyer if they can’t secure a mortgage loan.
Why it matters: Even with pre-approval, things can change—this gives the buyer an out if financing falls through.
3. Appraisal Contingency
What it does: Ensures the home appraises at or above the purchase price.
Why it matters: If the appraisal comes in low, the lender may not approve the full loan amount.
4. Title Contingency
What it does: Confirms the seller has clear ownership of the property.
Why it matters: If there are liens or legal issues, the buyer can cancel the deal.
5. Home Sale Contingency
What it does: Allows the buyer to make the purchase dependent on selling their current home.
Why it matters: It gives buyers time to free up funds, but can make offers less attractive to sellers.
6. Attorney Review Contingency (Specific to New Jersey)
What it does: Gives both parties 3 business days to have the contract reviewed by an attorney.
Why it matters: Either side can cancel or amend the contract during this period.
🤔 Should You Include Contingencies?
Buyers: Contingencies protect your investment. Don’t skip them unless you’re in a highly competitive market and fully understand the risks.

Sellers: Fewer contingencies usually mean a smoother, faster sale—but be cautious about accepting offers with too many unknowns.

📝 Final Thoughts
Contingencies are a normal—and smart—part of most real estate transactions. They help ensure that everyone is protected and that the deal only moves forward when key conditions are met.

If you’re unsure which contingencies to include or accept, talk to your real estate agent or attorney. They’ll help you strike the right balance between protection and flexibility.