Buying a home, especially your first home, can generate alternating emotional currents of excitement and fear. Proper “contingency agreements” are a way for home buyers to insulate themselves against fear and protect themselves against unpleasant shocks when investing in a new home.

Contingencies are pre-defined conditions that must be met in order for a home sale to be completed. If the contingencies are not satisfied prior to closing, the sale is cancelled and earnest money, funds deposited in good faith toward the purchase, will be returned to the buyer.

The most common residential real estate contingency clauses for Lakes Region home buyers include:

• A financing contingency that ensures buyers have time and ability to acquire any necessary mortgage or funding.

• An appraisal contingency that gives the buyer the option to withdraw an offer if the property appraises for a value less than the agreed-upon purchase price.

• A home inspection contingency to protect against major problems with regards to things including the home’s structure, heating system and roof. (On a related note, while a home inspection gives buyers “an out” if they are not satisfied with the results of the inspection, findings may also be used to negotiate so the deal doesn’t fall through. For example, it may be negotiated for the seller to assume responsibility for the cost of repairs noted by the home inspector, up to a pre-defined amount, or for the home’s price to be lowered to compensate for the estimated cost of repairs.)

Other contingencies may cover a “clear title” (to ensure against problems that may arise regarding the seller’s legal ownership of (and therefore right to sell) the property), the availability of property, casualty insurance and flood insurance, and, if purchasing a home that is not connected to city water, buyers may leverage contingencies for radon and water quality.

Finally, buyers may also insert a “home sale contingency” that gives them a chance to sell their current property in order to be able to buy the new home. Sellers may accept such a contingency, but they will generally, in return, require a “knock-out clause” that allows them to keep the listed house on the market. In the event that they receive another offer that does not have a house-sale contingency, you will have a set amount of time — for example, three days — to remove the house sale contingency and complete the sale. If you do not, the home can be sold to another buyer.

Buyers can and should use proper contingencies to protect themselves, but it is also important to not insist on too many contingencies when submitting an offer, as this can generate fear in the seller that they are wasting time on an offer that will never close, and possibly missing out on other opportunities as a result.

It is a seller’s market in the Lakes Region at this time, and when sellers are considering multiple offers, they prefer buyers who are prequalified for financing over those who insist on financing contingencies, and buyers who are lower rather than higher maintenance. Wouldn’t you feel the same, if you were selling your home in a seller’s market? When trying to put a deal together, it’s always best to keep in mind the seller’s concerns as well as your own.

Feel free to contact me with any questions about contingencies or other residential real estate topics. I’m happy to help and may address them in an upcoming article.


Brent Metzger is a Realtor® with Roche Realty Group in Meredith. Contact him at or 603-229-8322. To learn more about the Lake Region real estate market, visit

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