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Risks of Removing Buyer’s Contingencies

Typical real estate offers include a wide variety of standard contingencies. These can include home inspections, appraisal, and loan approval. In a fast-moving, seller’s market, one of the ways to make an offer more appealing is to remove contingencies.

Real estate contingencies are intended to protect the buyer from unforeseen issues. Once these contingencies are removed, the buyer typically has no recourse from these issues. The most important contingencies include:

  • Home Inspections – including mold, well/septic, structural, geological

  • Lending Approvals – including appraisal, title, loan rate and terms, final loan approval

  • Property Condition – this relates to the final walk-through, ensuring the property has been maintained during the escrow period

Any, or all of these items can create problems during, and even after, the closing period. Without the contingencies in place, the buyer is obligated to conclude the sale and any financial costs incurred by the seller for not doing so, including the forfeiture of their deposit.

Most of the United States is experiencing an advancing market. This means prices are rising at a steady pace. As a result, both buyers and sellers expect to settle on a sales price higher than recent, comparable sales. Buyers are desperate to have offers accepted and are willing to compromise on contingencies designed to protect them. Ensure you thoroughly review all contingencies or the waiver of them with your agent prior to making an offer.


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