How to Negotiate Contingencies in a Real Estate Contract

Negotiating contingencies is one of the most important steps in a real estate transaction. Whether you’re a buyer trying to protect your investment or a seller aiming for a smooth, fast close, understanding how to handle contingencies can make or break the deal.

🤝 What Are Contingencies in a Real Estate Contract?

A contingency is a clause that makes the purchase agreement conditional on certain events or approvals. Common examples include the inspection contingency, financing contingency, and appraisal contingency. These clauses protect both parties by setting clear expectations and escape clauses if something goes wrong.

💡 How Buyers Can Negotiate Contingencies

  • Be Specific: Instead of broad clauses, narrow down inspection or financing terms to show good faith.
  • Shorten Contingency Periods: A 5–10 day window for inspections signals commitment while maintaining protection.
  • Offer Earnest Money: Increase your earnest money deposit to strengthen your offer while keeping contingencies in place.
  • Use Partial Waivers: For example, waive minor repair requests but keep inspection rights for structural issues.
  • Get Pre-Approved: With a full underwritten loan approval, you can negotiate fewer financing conditions.

⚖️ How Sellers Can Negotiate Contingencies

  • Set Firm Deadlines: Keep contingency timelines short to prevent delays.
  • Request Proof: Ask buyers to provide lender letters, inspection receipts, or pre-approval documents.
  • Use Backup Offers: Having a kick-out clause gives you leverage if the buyer stalls.
  • Counter with Risk Balance: Instead of rejecting contingencies, propose modifications — such as non-refundable deposits after due diligence.
  • Know the Law: Be aware of your disclosure obligations to avoid disputes after removing contingencies. See seller disclosure rules.

🏁 How to Reach a Fair Compromise

The best negotiations leave both sides satisfied. Buyers keep enough protection to feel secure, and sellers gain confidence that the deal will close. Focus on collaboration — not confrontation — and document every agreement in writing.

If either side waives contingencies, make sure to understand the legal risks before proceeding.

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