A contingency in real estate refers toa clause in a real estate purchase agreement that specifies an action or requirement that must be satisfied before the contract may become legally enforceable. Before a contract to be considered binding, both the buyer and the seller must agree on the terms of each contingency and sign the contract.
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What is an example of contingency in real estate?
Definition of Contingency. For example, if a buyer submits an offer that includes an inspection contingency, the buyer has a specific period of time during which the buyer can inspect the home and, if it is unsatisfactory, rescind the offer. So long as the buyer complied with the terms of the contingency, she can usually recover her earnest money.
What is a contingent offer in real estate?
Not all contingent offers are marked as a contingency in the real estate listing. For example, purchases made with a mortgage generally have a financing contingency. Obviously, the buyer cannot purchase the property without a mortgage.
What is appraisal contingency in real estate?
Appraisal contingency: The success of the offer depends on an appraisal confirming that the home’s value is equal to or greater than the buyer’s offer amount.
What is a financing contingency?
Financing contingency: If a buyer needs a mortgage loan to buy the home, the buyer will typically include a financing contingency that allows the buyer to terminate the deal if the loan is not approved via a loan commitment letter by a certain date.