Process
Contingency
A condition in a purchase agreement that must be met for the sale to proceed — commonly financing, inspection, and appraisal — protecting the buyer's earnest money.
What does contingency mean?
Contingencies are the escape hatches in a purchase agreement. The common ones are financing (you must secure the loan), inspection (the home must pass your review), and appraisal (it must value at or above the price). If a contingency isn't met, you can usually cancel and recover your earnest money. In hot Michigan markets, buyers sometimes waive contingencies to win a bidding war — a real risk, since waiving the appraisal contingency means covering any shortfall in cash. A strong pre-approval lets you keep protective contingencies while still competing.
Common questions
What are the common contingencies?
Financing, inspection, and appraisal. Each must be satisfied for the sale to proceed, and each lets you cancel and recover earnest money if it isn't.
Should I waive contingencies to win a Michigan bidding war?
It's risky — waiving the appraisal contingency means covering any shortfall in cash. A strong pre-approval lets you compete while keeping protections.
What is an inspection contingency?
It lets you have the home professionally inspected and cancel or renegotiate if serious problems surface, protecting you before you're locked into the purchase.
Related terms