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\n <\/div>\n \n The Top 5% of Agents Sell Homes for Up to 10% More<\/h3>\n
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What contingencies in real estate impact sellers?<\/h2>\n
A real estate contingency is a clause in a purchase agreement<\/a> that specifies a condition that must be met for the contract to remain in force. For buyers, these clauses act as a safety net, allowing them to back out of a deal without penalty if issues like a low appraisal, failed financing, or major inspection problems arise.<\/p>\n As a seller, you should anticipate these common requests and be prepared to negotiate their specific terms. Let\u2019s take a look at the five most common contingencies in real estate that impact home sellers.<\/p>\n The inspection contingency<\/a> allows the buyer a set period to have the home professionally inspected. Based on the inspector’s report, the buyer can request repairs, ask for credits, or terminate the contract if significant issues are discovered. This is one of the most common and often heavily negotiated contingencies.<\/p>\n An appraisal contingency<\/a> protects the buyer if the home’s appraised value comes in lower than the agreed-upon sale price. Since a lender won’t finance a home for more than it is worth, this clause gives the buyer the ability to renegotiate the price or walk away if an “appraisal gap<\/a>” exists.<\/p>\n This contingency, also known as a mortgage contingency<\/a>, gives the buyer an out if they are unable to secure a mortgage to purchase the home. Even with pre-approval, a buyer’s loan can be denied for various reasons. This is a standard clause that protects the buyer\u2019s earnest money<\/a> if their financing falls through.<\/p>\n A home sale contingency<\/a> makes the purchase of your home dependent on the buyer successfully selling their own property. This is a particularly risky clause for sellers, as it ties your transaction to the success of another sale over which you have no control.<\/p>\n The title contingency<\/a> is a standard clause that ensures the property title is free of liens<\/a> or ownership disputes before the sale is finalized. A title search confirms you have the legal right to sell the property, protecting the buyer from future legal challenges. This is generally non-negotiable protection for all parties. As a home seller, the strategy you use to negotiate contingencies depends on market conditions. Your leverage to resist or modify a buyer’s requests is directly tied to local supply and demand. Below is a snapshot of the markets you may encounter and what you can expect.<\/p>\n In a seller’s market<\/a>, you have significant leverage due to high demand and low inventory. This is the best time to push back on non-essential requests or counter with shorter contingency periods. Buyers may even waive certain contingencies<\/a> to make their offers more competitive.<\/p>\n In a balanced market, a give-and-take approach is necessary. You will likely need to accept standard contingencies, but you can stand firm on requests for extensive repairs or unusually long timelines. The goal is to find a fair middle ground in your negotiations<\/a>.<\/p>\nInspection contingency<\/h3>\n
Appraisal contingency<\/h3>\n
Financing contingency<\/h3>\n
Home sale contingency<\/h3>\n
Title contingency<\/h3>\n
When to push back on contingencies based on market conditions<\/h2>\n
Hot (seller’s) market<\/h3>\n
Balanced market<\/h3>\n
Cool (buyer’s) market<\/h3>\n