Contingencies in Real Estate Contracts: FSBO Guide to Protecting Yourself

Learn how real estate contingencies protect buyers and sellers. FSBO sellers can use inspection, appraisal, financing, and home sale contingencies to manage risk and keep transactions smooth.

đź’ˇ What Are Real Estate Contingencies?

A contingency is a condition written into a real estate contract that must be met for the deal to close. If the condition isn’t satisfied, the buyer—or in some cases the seller—may back out without penalty.

For FSBO sellers, contingencies are important because they define when a buyer’s earnest money deposit can be refunded or kept. Knowing which contingencies are standard—and how to negotiate them—can protect your sale.

đź“‹ Common Contingencies in Real Estate

  • Inspection Contingency: Buyer may cancel or request repairs if the home inspection reveals issues.
  • Appraisal Contingency: Protects the buyer if the home appraises for less than the purchase price.
  • Financing Contingency: Allows cancellation if the buyer cannot secure a mortgage loan.
  • Home Sale Contingency: Buyer needs to sell their current home before closing on yours.

Each of these can impact your timeline and negotiation leverage as an FSBO seller.

🏠 Why Contingencies Matter for FSBO Sellers

Contingencies give buyers confidence—but they also create exit ramps. As a seller, understanding these terms helps you:

  • Know when earnest money can be refunded or forfeited
  • Plan around inspection requests and repair negotiations
  • Stay protected if an appraisal or financing issue arises
  • Avoid wasted time with unrealistic home sale contingencies

⚖️ FSBO Tips for Managing Contingencies

  • Get everything in writing in your purchase agreement.
  • Set clear timelines for inspections, appraisals, and financing approvals.
  • Understand your state’s standard contract forms and disclosure laws.
  • Be prepared to negotiate repairs—or offer credits instead.
  • Review contingencies carefully before accepting an offer.

Want to know more? See our guide on earnest money disputes and how contingencies affect deposits.

âť“ FAQs About Contingencies

  • Can a seller reject contingencies? Yes, but it may limit your buyer pool.
  • Do FSBO contracts include standard contingencies? Yes, most state-approved forms already include them.
  • What happens if a contingency isn’t met? The buyer can usually cancel and recover their deposit.
  • How do contingencies affect closing? They can delay or derail closing if not managed proactively.