Contingencies
TLDR: Contingencies are the hurdles you and the buyer have to jump to get to closing.
Now that you're under contract, contingencies are the biggest obstacles you and the buyer will need to overcome in order to get to closing. You can think of each contingency as a hurdle in an obstacle course to get to closing. Because the timeline for each contingency will be ticking concurrently, it'll be important to keep track of all deadlines.
Click here for a review of contingencies from Step 2.
Contingencies Overview
Here is a quick overview of some common contingencies:
Financing: For this contingency to be satisfied, the buyer will need to be approved for a loan
Appraisal: You may have to renegotiate with the buyer if the property doesn’t appraise for at least the purchase price. If they’ve included this contingency and they walk away, they will receive their earnest money deposit back.
Inspection: For this contingency, the property will be inspected and an inspection report provided to the buyer. The buyer will then likely negotiate with you for repairs and/or credits, unless the property is being sold as-is. If you cannot come to an agreement with the buyer, the buyer will have the option to terminate the sale and receive their earnest money deposit back.
Radon: This contingency ensures that radon levels are beneath the recommended limit or are mitigated to achieve such levels
Termite: This contingency stipulates that the seller is responsible for any wood boring insect damage
Fun Fact
While the HOA and Condo clauses of the contract are technically disclosures, they function in much the same way as a contingency since the buyer is legally permitted to excuse him- or herself from the sale within certain time frames.