Transactions
What is contingency?
A contingency is a condition written into a purchase contract that must be met for the sale to proceed, allowing the buyer to withdraw without losing their deposit if it is not.
The common ones are financing (the buyer must secure a mortgage), appraisal (the property must value at or above the price), inspection (the buyer may withdraw or renegotiate after survey), and sale of the buyer's existing home.
Each contingency is a transfer of risk from buyer to seller, which is why waiving them makes an offer more attractive in a competitive market — and why doing so can be expensive if the risk materialises.
Contingencies carry deadlines. Missing one can waive the protection automatically, so the calendar around them is as important as the clause.
Related terms
Escrow is an arrangement where a neutral third party holds funds and documents on behalf of a buyer and seller, releasing them only once every agreed condition of the sale has been satisfied.
A property is under contract when a seller has accepted an offer and both parties are bound by a purchase agreement, but the sale has not yet completed because contingencies or closing steps remain.
An appraisal is a formal opinion of a property's market value produced by a licensed appraiser, most often commissioned by a lender to confirm that a property is worth enough to secure the loan against it.
A seller's market is one where buyer demand exceeds available inventory, giving sellers pricing power, shorter selling times, and frequently multiple competing offers.