Word of the Month: Contingency
con·tin·gen·cy [kuhn-tin-juhn-see]
plural
contingencies
- dependence on chance or on the fulfillment of a condition; uncertainty; fortuitousness.
Nothing was left to contingency.
- a contingent event; a chance, accident, or possibility conditional on something uncertain.
He was prepared for every contingency.
Synonyms: predicament, likelih
- something incidental to a thing.
In a real estate transaction, a contingency can be explained as a clause in the contract that states there are certain conditions that must be met by either the buyer or the seller in order to continue to the next step in the contract. There are contingencies in almost every real estate contract.
In real world examples, if you've ever heard someone say a home is “under contract but still contingent,” they’re talking about conditions that must be met before the sale can move forward.
A contingency is like a safety net, it protects buyers and sellers by allowing certain things to happen before the deal is locked in.
For example:
- A home inspection contingency gives the buyer time to inspect the home and negotiate repairs.
- An appraisal contingency makes sure the home’s value matches the purchase price.
- A financing contingency gives the buyer time to officially secure a loan.
Each one of these contingencies helps reduce risk. And while they’re common, understanding how they work, and how to navigate them, can make or break a deal.
If you're planning to buy or sell, we're here to guide you through every contingency (and explain them without the jargon).