What are contingencies in a home offer, and which ones matter?

A contingency is a condition written into a purchase contract that must be satisfied for the deal to proceed, and if it is not, the buyer can terminate and recover the earnest money. The three that appear in most contracts are the inspection contingency, allowing you to exit or renegotiate based on the physical condition of the property, the financing contingency, protecting you if your loan is not approved, and the appraisal contingency, protecting you if the property appraises below the contract price. A sale contingency, making the purchase conditional on selling your current home, is weaker from the seller's perspective and often rejected in competitive markets.

Each carries a deadline, and the deadlines are the operative part. Contingency periods are typically measured in days from contract acceptance, and failing to act within the window generally waives the protection automatically. Calendar every date the day the contract is signed. Note also that the way you exercise matters: most contracts require written notice in a specified form, and a verbal conversation with an agent does not preserve your rights.

On waiving them. During periods of intense competition, buyers routinely waive contingencies to make offers more attractive, and the practice is exactly as risky as it sounds. Waiving inspection means buying a house you have not examined. Waiving financing means your deposit is at risk if the loan falls through for reasons outside your control. Waiving appraisal means committing to cover any gap in cash. Intermediate structures exist and are underused: shortening the window rather than eliminating it, capping the appraisal gap at a specific dollar amount you can actually cover, or conducting an information-only inspection that gives you knowledge without giving the seller renegotiation risk. Waive when you have deliberately decided the risk is acceptable and you have the resources to absorb it, not because an agent said it was necessary to compete.