Contingencies are things that have to happen before you or the seller can complete the purchase. If the contingencies are not taken care of before the closing, the sale is canceled and you get your earnest money back. You should use contingencies to protect yourself, but if you have too many the sellers may think you are just wasting their time with an offer that will never close. Use contingencies wisely.
Typical contingencies are:
Financing contingency that you get a mortgage loan at a specific amount and rate that you can afford.
Appraisal contingency that gives you the right to withdraw the offer if the appraised value is less than the purchase price.
House sale contingency if you already have a home and need to sell it to be able to buy a new home. Sometimes, a seller will accept an offer with this kind of contingency. They may require a kick-out or knock-out clause. This lets the seller to keep the house on the market. If the seller gets another offer that does not have a house sale contingency, you will have a set amount of time to remove your house sale contingency and complete the sale. If you do not, the seller can sell the home to another buyer.
Clear title contingency to make sure that there are no problems with the legal ownership of the property.
Home inspections that indicate no major problems. A typical offer will include contingency clauses for various home inspections, including inspections of the home's structure, heating and cooling systems, roof, pests, lead hazards (for pre-1978 housing), and other environmental concerns. It is not normal for the seller to agree in the contract to pay for all repairs noted by the home inspectors. That would be like writing a blank check to the buyer. But a satisfactory completion of these inspections, with repairs and replacements (up to a set amount of money) taken care of by the seller, is usually needed for completion of the sale.
