Which Buyer Contingencies and Protections Should You Be Aware of?

In a standard purchase and sale agreement, there are certain contingencies and protections in place for buyers that both buyers and sellers need to be aware of so they know what they’re getting into during a home sale.

First, here are the three main contingencies:

1. The financing contingency. This contingency states that the buyer must obtain a loan to purchase the property. It also specifies what kind of loan they’re pursuing, how much they plan on putting down for their down payment, and whether they want any closing costs to be paid by the seller. This contingency also allows the buyer to walk away from the agreement if something unexpected happens, like they lose their job and they’re no longer to obtain financing.

Included in this contingency is an appraisal protection for the buyer. If the home is under contract for $300,000 and the appraisal comes in at $275,000, for example, it outlines a specific set of options the buyer can pursue. These include reducing the purchase price, bringing more money to the table, or negotiating some kind of middle ground with the seller.

2. The title contingency. This contingency states that the seller must provide a marketable title to the buyer. In other words, the seller has to be able to sell the house they’re trying to sell. In addition, if any serious issue comes up in the preliminary title commitment, it allows them to walk away from the deal.

3. The inspection contingency. This contingency gives the buyer a certain number of days (usually 10 or fewer) to inspect anything and everything about the property. The buyer doesn’t necessarily have to find something wrong with the home during this time to back out of the deal, either. They can simply have a change of heart and decide they don’t want the house anymore. If the buyer finds certain issues about the house during the inspection, they can also choose to negotiate with the seller over making repairs.

Whether you’re a buyer or a seller, always speak to your agent to know which protections are in place

during the transaction.


Now, here are a couple lesser-known buyer protections:

1. The information verification period, or the first 10 days after mutual acceptance. This is a time period where the buyer and their agent work with the listing agent to ensure that everything that was disclosed to them about the listing is verified. If any information they were provided about the listing turns out to be incorrect, the buyer has the option to walk away and get their earnest money back.

2. The seller disclosure statement (also known as Form 17). This document outlines everything the seller knows about the property and answers certain questions the buyer may be wondering about it. For instance, does the property provide an adequate year-round water supply? Are there any HOA fees? The buyer has their own review period for this document.

Lastly, there are lesser-used contingencies, usually called an “HOA review” or a “neighborhood review contingency,” that allow the buyer to ensure that the neighborhood they’re moving into and/or the HOA they’re accepting is agreeable to them.

Whether you’re a buyer or a seller, always speak to your agent to know which protections are in place during the transaction.

As always, if you have any other questions or real estate needs, feel free to reach out to me. I’d be happy to assist you.

Gavin Shnieder

Gavin is the founder and owner of Abode Base Real Estate & Smart Pad Property Management. When he's not helping folks buy and sell homes or training agents, he enjoys spending time with his 3 daughters and beautiful wife.

View all posts
Reviews on Zillow


“We just recently closed on what had been a rental home with Gavin Schneider as our sellers agent. The advice Gavin gave on pricing and which repairs … more
by truedana1


“Amy Baalaer at Abode Base was FANTASTIC to work with! My favorite part about working with Amy was how down to earth and not pushy she was. She seemed … more
by jonandlindseyself


“Lydia helped work around my crazy work schedule. We looked, literally, all over the state of WA. She willingly showed us countless properties without … more
by trot27