Real Estate Contingencies Explained: What Buyers and Sellers Need to Know
What Is a Real Estate Contingency?
When you buy or sell a home, the purchase agreement often comes with contingencies—conditions that must be met for the deal to move forward. These safeguards protect buyers and sellers from unexpected surprises and provide a framework for how to handle potential issues.
In the Driftless Region real estate market—including La Crosse, Winona, and Houston County and surrounding areas—contingencies are common. Understanding them helps buyers write smarter offers and helps sellers know what to expect before accepting one.
Why Contingencies Matter
Contingencies provide an “exit plan” if something doesn’t go as expected. Without them, a buyer could lose earnest money or a seller could waste valuable time. When handled well, contingencies create a fair and balanced transaction.
The Most Common Real Estate Contingencies
1. Financing (Mortgage) Contingency
This protects the buyer in case they cannot secure financing. If the buyer’s loan is denied despite their best efforts, this contingency allows them to back out without losing their earnest money deposit.
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Who it protects: Buyers.
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Why it matters: Even pre-approved buyers can run into loan issues, so this contingency provides peace of mind.
2. Home Inspection Contingency
This gives buyers the right to have the home inspected within a set timeframe. If major issues are found—like a faulty roof or unsafe wiring—the buyer can renegotiate repairs, request credits, or walk away.
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Who it protects: Buyers.
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Why it matters: It ensures the buyer knows the true condition of the home before finalizing the purchase.
For more information on Home inspections, review our blog post Understanding Your Home Inspection.
3. Appraisal Contingency
Most lenders require an appraisal to confirm the home’s value. If the home appraises for less than the purchase price, this contingency allows the buyer to renegotiate or withdraw.
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Who it protects: Buyers and lenders.
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Why it matters: It prevents buyers from overpaying for a home and protects lenders from issuing loans above the home’s value.
Here is a highly informative article on home appraisals, home assessments and what they mean.
4. Home Sale Contingency
This is used when a buyer must sell their current home before purchasing a new one. It gives the buyer time to close on their sale and use those funds for the new purchase.
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Who it protects: Buyers.
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Why it matters: It’s often essential for buyers who cannot afford two mortgages at once. Sellers, however, may see this as a risk in competitive markets.
5. Title Contingency
This ensures the property’s title is free of liens, ownership disputes, or other legal issues. If a title search reveals problems, the buyer can back out until they’re resolved.
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Who it protects: Buyers.
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Why it matters: A clean title is critical for transferring ownership and avoiding future legal headaches.
6. Homeowners Insurance Contingency
Lenders typically require proof of homeowners insurance before closing. If the property is uninsurable due to location risks (like flooding) or condition, this contingency protects the buyer.
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Who it protects: Buyers.
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Why it matters: It ensures the home can be covered and the mortgage can proceed.
Less Common but Important Contingencies
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Inspection-Specific Contingencies: For radon, mold, lead paint, or septic systems.
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Zoning/Permit Contingency: Protects buyers who plan to remodel or add onto the property.
How Contingencies Affect Buyers
For buyers, contingencies offer protection but can also make an offer less competitive in a hot market. Julie helps buyers strike the right balance—keeping important protections in place while crafting offers that appeal to sellers.
How Contingencies Affect Sellers
For sellers, contingencies can add uncertainty. The more contingencies an offer includes, the more opportunities for the deal to fall through. Julie helps sellers evaluate offers carefully, weighing the strength of the buyer and the likelihood of closing smoothly.
Julie Delap’s Role in Navigating Contingencies
Real estate contracts can feel like a maze of legal language. Julie’s role is to simplify the process for both buyers and sellers by:
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Explaining what each contingency means in plain terms.
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Helping buyers know which contingencies are essential.
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Advising sellers on which offers are most secure.
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Coordinating with lenders, inspectors, and attorneys to ensure deadlines are met.
Her goal is to protect her clients while keeping transactions on track.
Contingencies are a normal and important part of real estate contracts. They provide protection, clarify expectations, and help buyers and sellers move forward with confidence. Whether you’re buying your first home, downsizing, or selling after decades, understanding contingencies is key to a smooth transaction.
