5 Real Estate Contingencies Every Buyer and Seller Should Know

By Bryan David

Bryan David is one of the best REALTORS® serving Ocean Springs, Biloxi, Gulfport and the entire coast. He is a Biloxi native, military veteran and retiree, and a multi-year top-producing agent with hundreds of satisfied clients.

If you’re buying or selling a home, your contract is full of contingencies. And most people don’t realize that every single one of them is negotiable. A contingency is simply a condition that has to be met for the deal to move forward. If it isn’t met, somebody gets to walk, usually with the earnest money. Used right, they protect you. Given up without thinking, well, they’re going to cost you.

The loan contingency is your safety net as a buyer, so don’t waive it unless you truly understand what you’re doing. This one says the purchase depends on the buyer actually getting approved for the mortgage. If financing falls through due to no fault of their own and the reason is spelled out in the contract, the buyer gets to walk with their earnest money. Sellers, financing contingencies are normal, but pay attention to how solid the pre-approval really is. A fully underwritten approval carries a lot less risk than a basic pre-qualification.

The appraisal contingency matters more than most people think. When there’s a loan involved, the lender is going to order an appraisal to confirm that the home is actually worth the purchase price. If it appraises low, this contingency gives the buyer options: renegotiate the price, bring extra cash to cover the gap, or walk away with their earnest money.

Buyers, keep in mind that in a market where prices are climbing fast, low appraisals are common. Sellers, a low appraisal can shake up a deal even when the buyer is fully qualified. Like everything else in the contract, the terms of the appraisal contingency are negotiable.

The inspection contingency gives buyers a window into what’s really going on. This is the chance to have the home professionally inspected, and not just by a home inspector, but by any qualified person. After inspections are complete, the buyer can ask for repairs, request a credit, renegotiate the price or concessions, or walk away with their earnest money. Buyers, use this one right and keep the timeline in mind. Sellers, expect some back and forth at this stage because it is a negotiation. Getting a pre-listing inspection and making repairs before listing can take a lot of the drama out of it. And if you need more time, ask for it. It’s all negotiable.

The wood-destroying insect contingency is not just a formality on the Gulf Coast. We have serious termite pressure here, and this is one contingency you don’t want to waive, even if you’re paying cash. Sellers, a bad termite inspection can kill a deal. Most lenders and buyers won’t accept a pre-inspection report because there’s a timeline for how current it needs to be near closing, but getting one done and dealing with any issues before you list can save you a lot of heartache. This one is negotiable like the rest, but rarely do you ever want to skip it.

The home sale contingency is the one that isn’t built into the standard contract. It has to be added, and it means the buyer’s offer depends on them selling their current home first. For buyers, this can be a smart tool if you need the equity from your current home to close. It lets you make a real offer without carrying two mortgages or gambling on the timing.

A seller in a strong market may not accept it or may want non-refundable earnest money in return. Sellers, protect yourself. You’re tying the sale of your home to a property you don’t control. Make sure the buyer’s home is listed, and ideally under contract. If you do accept, insist on a first right of refusal. Keep the home on the market, and if another solid offer comes in, the original buyer gets 48 to 72 hours to remove their contingency or step aside.

A home sale contingency isn’t bad. Walking into one without the right protection, well, that is bad. They’re negotiable tools, and how you use them or give them up can make or break a deal. That’s exactly what we walk our clients through, line by line.

If you or anyone you know is looking to buy, sell, or invest in real estate on the Mississippi Gulf Coast, or if you just have a question, reach out. Call or text us at 228-215-1861, email us at bryan@expectrealty.com, or visit expectrealty.com. We’d love to connect.