Navigating the Contingency Maze: What Buyers and Sellers Should Know

When making an offer on a home in Raleigh, Cary, Apex, Holly Springs, or Fuquay Varina, price is only one piece of the puzzle. The terms of your agreement can be just as important as the final number. As you work with your REALTOR® to structure your offer, it is important to talk about contingencies. Contingencies act as a safety net, allowing you to walk away from the deal if certain conditions are not met.

How Do Contingencies Work in Real Estate?

Contingencies are conditions in a real estate contract that must be satisfied for the transaction to move forward. Some are designed to protect the buyer, while others protect the seller. If a contingency is not met, either party can back out of the contract without penalty.

When your offer is accepted, you typically provide an earnest money deposit, often between one and two percent of the purchase price. This deposit demonstrates to the seller that you are committed to buying the home. If the deal closes, your earnest money is applied toward your down payment and closing costs.

If you decide to withdraw for a reason not covered by contingencies, you may lose your deposit. However, if you back out under the protection of a contingency, your earnest money is usually refunded.

Eight Common Types of Contingencies:

Home Inspection Contingency

This is one of the most common protections in Triangle contracts. Homes in Cary, Apex, Fuquay Varina, and surrounding areas can have hidden problems. This contingency gives you the opportunity to hire an inspector, review the findings, and decide whether to move forward, renegotiate, or walk away if repairs are too costly.

Appraisal Contingency

If you are financing your purchase, your lender will require an appraisal to confirm the value. If the property appraises below the agreed price, this contingency allows you to renegotiate or exit the contract while protecting your earnest money.

Financing Contingency

Even with pre-approval, final loan approval is never guaranteed. A financing contingency allows you to cancel the contract with your deposit refunded if your loan falls through.

Sale of Current Home Contingency

If you are buying in Raleigh or Cary while trying to sell your current property, timing can be tricky. This contingency protects you if your current home does not sell by a set date.

Home Insurance Contingency

Most lenders require proof of insurance before closing. If you cannot secure coverage, this contingency allows you to cancel without penalty.

Title Contingency

A title search ensures there are no liens or legal disputes against the property. If issues cannot be resolved, a title contingency allows you to walk away.

HOA Contingency

If the home is in a homeowners association, this contingency gives you time to review the fees, rules, and restrictions. If they do not suit your lifestyle, you can withdraw.

Suitable Housing Contingency

This one primarily protects sellers, allowing them to delay or cancel closing if they cannot find a new home before the agreed date.

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