The Importance of Contingencies When Buying a House

July 16, 2021

All real estate agents, me included, have been telling sellers to “list now” to take advantage of this crazy sellers market.  

But what about buyers?  National inventory of active listings is down 43% (according to  All of this demand means buyers are going to ever-greater lengths to make their offer stand out. They’re making sky-high offers and writing heartfelt letters to sellers about why they should get the house. But some buyers in especially tight markets are taking even riskier measures to beat out competitors: They’re removing contingencies.

What are contingencies?  In the world of real estate, they are essentially conditions that must be met to finalize the sale of a home. The provisions of a contingency contract are there to protect buyers and sellers. A contingency offers an escape hatch if problems arise with the home or the home buying process.

While it’s tempting for buyers to waive contingencies to make an offer more compelling, it can leave them unprotected from unexpected fees, health-threatening situations, and—worst-case scenario—a bad investment. 

Home Inspection  A home inspection is the foundation on which all other real estate contingencies are built. In the inspection, a neutral expert assesses the home for roofing, plumbing, structural, electrical, and other major problems. Waiving it entirely gives the buyer absolutely no protection and could come back to bite you. Instead, buyers should assess what kind of repairs need to be done, and decide if it’s worth it to them to cover the fixes, or if they would prefer to work with the seller on a lower price. 

Mold remediation  If the initial home inspection turns up a potential mold issue, a mold specialist needs to be brought in to analyze the issue. Serious mold problems can cause health issues, some of which can be quite serious. Do you want your kids breathing in harmful mold?  The thing about mold is that it gets worse over time and can be incredibly expensive and time consuming for remediation.

Well water/septic system inspection  Another contingency that should never be slashed is the well water/septic system inspection.  As with mold, this is an issue that can be very expensive to fix—a septic system can cost tens of thousands of dollars and it have serious ramifications to your health.

Appraisal  An appraisal waiver commits the buyer to pay the agreed-upon price, whether or not the mortgage lender agrees to lend the buyer the balance.  A buyer could potentially on the hook to pay the difference once the house is under contract.

Financing  The financing contingency clause asserts that your offer is dependent on being able to secure financing. If you remove it, you may not get your deposit back if you cannot obtain a loan. If you’re like most buyers and plan on financing a home purchase with a mortgage, you should never remove the financing contingency.

So, when you are fed up with offers being turned down, remember that the perfect house or situation will appear without subjecting yourself to troubles down the road.