19 Jan What does contingency mean?

What does the term contingent or contingency mean in Real Estate?

Contingency is a clause in a contract that states that certain conditions have to be met by the buyer or seller in order to move on to the next step.

There are contingencies in almost every real estate contract. They are there to protect the buyer and the seller. If the contingencies are not met, there might be a breach in the contract, and the transaction could fail to close.

What are some common contingencies in Texas?

1. Financing – a buyer must be able to obtain financing by the date specified in the Third Party Financing Addendum. The shorter amount of days in contract tend to benefit the seller. The longer will benefit the buyer.

2. Appraisal – if the home does not appraise at the sales price in contract or for higher, then the buyer can back of the contract.

3. Sale of a home – a buyer may need to sell their home in order to purchase another one. This contingency has a date in the contract that the home must sell by.