Let's talk about a "Contingency"
You may have heard the term contingency used in regard to real estate, but what does it mean? Contingency is when there's something that is dependent upon other circumstances or conditions being met. Another term for "contingent" on a property listing may be "pending". Contingencies are usually to protect the potential buyer. A contingency can make a real estate deal go great or stop it completely. Below are three types of contingency clauses that are commonly found in many real estate contracts.
Financing contingency- this clause essentially states that the buyer has a certain amount of time to secure financing to complete the purchase of the subject property. This clause may allow the buyer to get their earnest money back since the purchase was not able to move forward due to these specified circumstances.
Appraisal contingency- this clause states that if the market value does not appraise to the amount the buyer has agreed to pay the seller, then the buyer has the option to rescind the offer. This clause may allow the buyer to get their earnest money back since the purchase was not able to move forward due to these specified circumstances.
Inspection contingency- this clause gives the buyer a certain amount of time to get the property inspected, and to back out of the pending sale if the condition of the property is determined unsatisfactory. This clause may allow the buyer to get their earnest money back since the purchase was not able to move forward due to these specified circumstances.
Keep in mind that there are other types of contingency clauses besides the ones discussed in this post.