Home Buying Contingencies: Which Ones Should You Prioritize?

Home Buying Contingencies: Which Ones Should You Prioritize?

Purchasing a home is an exciting journey that you are starting. Amid the excitement of house hunting, buyers may have one crucial issue that often stumps them: which contingencies should you prioritize? 

It might be confusing for a prospective owner of the property to navigate the web of contingencies. Don’t worry; we’ll break down all of the important backup plans that every buyer needs to know in our comprehensive guide, enabling you to make informed decisions and confidently obtain your ideal property.

Home Buying Contingencies: Which Ones Should You Prioritize?

Before delving into specific contingencies, let’s first clarify what they entail. Contingencies are conditions included in a purchase agreement that must be met for the sale to proceed smoothly. They serve as safeguards for buyers, allowing them to back out of the deal without financial repercussions if certain conditions are unmet.

Prioritizing contingencies is crucial as it determines the level of protection you have as a buyer. While it’s tempting to waive contingencies to make your offer more appealing to sellers in a competitive market, doing so can expose you to significant risks.

Therefore, understanding which contingencies to prioritize is paramount for safeguarding your investment and ensuring a seamless home-buying process.

1. Financing Contingency

Statistics reveal that approximately 21% of real estate transactions fall through due to financing issues.

One of the most critical contingencies to prioritize is the financing contingency. This contingency allows you to back out of the deal if you’re unable to secure a mortgage loan on satisfactory terms.

In a competitive market where multiple offers are common, having a financing contingency in place protects you from potential financial strain if you encounter difficulties obtaining financing.

Furthermore, it’s essential to understand the implications of waiving this contingency. While it may make your offer more appealing to sellers, it also exposes you to the risk of losing your earnest money deposit if you’re unable to secure financing.

Therefore, prioritizing the financing contingency provides you with a safety net and ensures that you’re not committing to a purchase that could jeopardize your financial well-being.

Also Read: How To Make An Offer On A House?

Home Buying Contingencies: Which Ones Should You Prioritize?

2. Inspection Contingency

According to the American Society of Home Inspectors, 88% of homebuyers opt for a home inspection. The inspection contingency gives you the right to have the property inspected by a professional home inspector.

A thorough inspection can uncover hidden defects or issues with the property, allowing you to negotiate repairs or even withdraw from the sale if the issues are significant. 

Prioritizing the inspection contingency ensures that you’re aware of any potential issues with the property and can make an informed decision about proceeding with the purchase.

Moreover, investing in a comprehensive home inspection can save you money in the long run by identifying problems that may not be apparent during a walkthrough. From structural issues to hidden water damage, a professional inspector can provide valuable insights that help you make an informed decision about the property’s condition.

3. Appraisal Contingency

Data from the National Association of Realtors shows that 10% of real estate contracts are delayed or canceled due to appraisal issues. The appraisal contingency protects you from overpaying for a property by ensuring the home’s appraised value aligns with the agreed-upon purchase price.

If the appraisal comes in lower than the purchase price, you have the option to renegotiate with the seller or walk away from the deal without penalty. Prioritizing the appraisal contingency safeguards you from overpaying and ensures that you’re making a sound investment.

Additionally, understanding the role of appraisals in the home-buying process can help you navigate negotiations with sellers. If the appraisal comes in lower than expected, you can leverage this information to renegotiate the purchase price or request repairs to address any discrepancies.

By prioritizing the appraisal contingency, you’re protecting yourself from potential financial loss and ensuring that you’re paying a fair price for the property.

4. Title Contingency

According to a survey by the American Land Title Association, 25% of real estate transactions experience title issues. The title contingency protects you from purchasing a property with unresolved title issues, such as liens or claims against the property.

A thorough title search conducted by a title company can uncover any potential issues with the property’s title, allowing you to address them before closing or withdraw from the sale if necessary. Prioritizing the title contingency ensures that you have clear ownership of the property and avoids legal complications down the line.

Furthermore, investing in title insurance provides an additional layer of protection against unforeseen title issues that may arise after the purchase. 

While title insurance is optional, it’s a small price to pay for peace of mind knowing that your investment is safeguarded against any potential claims or disputes over the property’s ownership.

Home Buying Contingencies: Which Ones Should You Prioritize?

5. Home Sale Contingency

The National Association of Realtors reports that 34% of homebuyers have a home sale contingency. A home sale contingency can provide crucial protection if you’re selling your current home while simultaneously buying a new one.

This contingency allows you to back out of the purchase agreement if you’re unable to sell your existing home within a specified time frame.

Prioritizing the home sale contingency gives you flexibility and peace of mind while navigating the complexities of buying and selling simultaneously.

Moreover, understanding the nuances of home sale contingencies can help you streamline the process and avoid potential pitfalls. From setting realistic timelines to coordinating closings, proper planning is essential to ensure a smooth transition between homes.

By prioritizing the home sale contingency, you can navigate the intricacies of the real estate market with confidence and secure your dream home without added stress.


Prioritizing contingencies is essential for protecting your interests and ensuring a successful home-buying experience. By understanding the importance of contingencies and prioritizing them accordingly, you can navigate the home-buying process with confidence and secure your dream home without unnecessary risks. 

Whether it’s financing, inspection, appraisal, title, or home sale contingencies, each plays a vital role in safeguarding your investment and providing peace of mind as you embark on this exciting journey of homeownership.

So, before you sign on the dotted line, remember to prioritize contingencies and make informed decisions that will set you up for success in your new home. Happy house hunting!

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