By Craig Bennett Group
Real estate contingencies are one of the most important yet often misunderstood components of a home purchase. They exist to protect buyers and sellers, provide clarity during escrow, and create a structured path toward closing.
As Phoenix and Scottsdale real estate experts, we at Craig Bennett Group believe that understanding how contingencies work empowers our clients to move forward with confidence and avoid unnecessary surprises.
In competitive markets like Phoenix, Scottsdale, and Paradise Valley, contingencies can also influence how attractive an offer appears to a seller. Knowing when to include them, how to structure them, and when it may be appropriate to modify them is a critical part of a successful real estate strategy.
What Is a Real Estate Contingency?
A real estate contingency is a condition written into a purchase contract that must be met for the transaction to move forward. If the contingency is not satisfied within a specified timeframe, the buyer or seller may have the right to renegotiate or cancel the contract without penalty.
Think of contingencies as safeguards. They give buyers time to complete inspections, secure financing, review disclosures, and confirm that the property meets expectations. For sellers, contingencies establish clear deadlines and reduce uncertainty once a property is under contract.
The Inspection Contingency
The inspection contingency is one of the most common and important protections for buyers. It allows the buyer to hire professional inspectors to evaluate the property’s condition, including the roof, plumbing, electrical systems, HVAC, and structural components.
In Arizona, inspections are especially important due to climate specific considerations such as roofing materials, cooling systems, and drainage. If issues are discovered, the buyer can request repairs, ask for a credit, renegotiate the purchase price, or cancel the contract.
At Craig Bennett Group, we help our clients interpret inspection reports and determine which findings are significant. Not every issue warrants concern, and part of our role is helping buyers distinguish between normal wear and material defects that impact value or safety.
The Appraisal Contingency
An appraisal contingency protects the buyer if the home does not appraise at or above the agreed upon purchase price. Lenders require an appraisal to confirm that the property value supports the loan amount.
If a home appraises low, the buyer may have the option to renegotiate the price, bring additional funds to closing, or cancel the contract. In competitive markets where bidding wars are common, appraisal gaps can occur, making this contingency particularly important.
Craig Bennett Group advises buyers on pricing strategy and appraisal risk before submitting an offer. When appropriate, we help structure terms that balance competitiveness with financial protection.
The Financing Contingency
A financing contingency allows the buyer time to secure final loan approval. Even with pre approval, a lender must complete underwriting, verify documentation, and confirm that the property meets loan requirements.
If financing falls through due to circumstances beyond the buyer’s control, this contingency allows the buyer to exit the contract without losing earnest money. For sellers, it provides assurance that the buyer is actively pursuing financing within a defined timeline.
We work closely with trusted local lenders to ensure communication is seamless and deadlines are met. This coordination reduces delays and helps transactions move forward smoothly.
The Title and Disclosure Contingency
Title and disclosure contingencies allow buyers to review important legal and property related documents. These include the title report, seller disclosures, homeowners association documents, and any recorded easements or restrictions.
In luxury markets like Paradise Valley and Scottsdale, properties may have unique zoning considerations, private road agreements, or HOA rules that affect future use. Reviewing these documents carefully is essential.
Craig Bennett Group walks our clients through these materials and explains how they may impact ownership, resale, or renovation plans. This step is about ensuring there are no hidden surprises after closing.
Sale of Buyer’s Home Contingency
In some situations, buyers include a contingency that allows them to purchase a new home only if their current home sells. While this can be a necessary protection, it is often less attractive to sellers in competitive markets.
When this contingency is required, we help our clients position their offer strategically. This may include pricing the existing home competitively, shortening timelines, or strengthening other terms to offset seller concerns.
How Contingencies Affect Your Offer Strategy
Contingencies are not one size fits all. The number and type of contingencies included in an offer can significantly influence how a seller perceives it. Fewer contingencies may make an offer more appealing, but removing protections without a clear strategy can increase risk.
At Craig Bennett Group, we tailor contingency strategies to each client’s situation. For some buyers, maintaining full protections is essential. For others, modifying timelines or terms may help secure a highly desirable property without unnecessary exposure.
Our role is to explain the risks and benefits of each option so our clients can make informed decisions aligned with their comfort level and goals.
What Happens When a Contingency Is Removed?
Once a contingency is satisfied or waived, the buyer is typically committed to moving forward. At this point, earnest money becomes more at risk if the contract is canceled for reasons not covered by remaining contingencies.
We closely monitor contingency deadlines and ensure our clients understand when and how contingencies are released. Clear communication and proactive management are key to protecting our clients throughout escrow.
FAQs About Real Estate Contingencies
Are contingencies required in every real estate transaction?
No, but they are highly recommended, especially for buyers. Contingencies provide important protections and allow time for due diligence.
Can a seller reject an offer because of contingencies?
Yes. Sellers may prefer offers with fewer or shorter contingencies, particularly in competitive markets.
What happens if a contingency deadline is missed?
Missing a deadline can result in automatic removal of the contingency, increasing risk for the buyer. This is why professional oversight is essential.
Should I waive contingencies to win a bidding war?
Waiving contingencies can strengthen an offer but also increases risk. Craig Bennett Group helps buyers evaluate when this strategy may or may not be appropriate.
Do contingencies apply to new construction homes?
Yes, though they may be structured differently. Builder contracts often limit contingencies, making expert review especially important.
Understanding real estate contingencies is essential to protecting your investment and navigating the home buying process with confidence. At Craig Bennett Group, we guide our clients through every detail of the contract, ensuring clarity, strategy, and peace of mind. If you are buying or selling a home in Phoenix, Scottsdale, or surrounding luxury communities, we invite you to connect with us today.
Work with Craig Bennett Group and experience informed, expert representation from start to finish.
