Contingency

Most residential purchase contracts in the US include three standard contingencies, financing, inspection, and appraisal. Each gives the buyer a contractual escape hatch if a specific condition isn't met during the under-contract period.

The mechanism: if a contingency is in place and its triggering condition occurs (loan denied, inspection problems, appraisal below contract price), the buyer can typically terminate the contract and recover the earnest money deposit. If the contingency has been waived, the buyer no longer has that protection, they remain obligated to close even if the issue arises, or risk losing the deposit.

Why it matters: contingencies are the buyer's primary downside protection in a contract. They don't change the price; they change the optionality. In competitive markets, sellers often prefer offers with fewer contingencies because those offers are more likely to actually close. Buyers have to weigh competitiveness against risk.

Common gotcha: contingencies have specific time windows (typically 7–14 days for inspection, longer for financing and appraisal). Once a window closes, the buyer no longer has that contingency's protection, even if the underlying issue arises later. Calendar discipline during the under-contract period determines whether contingencies actually work as intended.