What Does “Contingency” Mean in Real Estate Transactions?

Today, I want to explain a critical term in the real estate purchasing process: “Contingency”. This term plays a crucial role in purchase agreements and can significantly influence the outcome of your real estate transaction.

What is a Contingency?

A contingency in a real estate purchase agreement is a condition that must be met before the transaction can be finalized. These conditions act as safeguards for both buyers and sellers to ensure that certain criteria are met.

Common Types of Contingencies:

  • Financing Contingency: Ensures the buyer obtains the necessary financing.
  • Inspection Contingency: Allows the buyer to have the property professionally inspected.
  • Sale Contingency: Depends on whether the buyer can sell their current property.

Why are Contingencies Important?

Contingencies provide you, as a buyer, the option to back out of the purchase if certain conditions aren’t met, without risking financial loss. For sellers, they offer some assurance that the buyer is seriously interested and capable of fulfilling their commitments.


Contingencies are an essential part of the purchasing process, providing both protection and flexibility. They help to minimize risks and ensure that both parties understand and meet their obligations.

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