A home inspection contingency gives buyers time to uncover issues before finalizing the sale.
What Is a Contingency in a Real Estate Contract?
Anyone reading through a real estate purchase contract for the first time will run into the word “contingency” fairly quickly. Matt Cheney explains that a contingency is an addendum, or a piece of extra paperwork attached to the sales contract, that gives the buyer a specific, defined way to exit the contract if a certain condition is not met. Contingencies are not loopholes. They are standard, negotiated protections that both buyers and sellers agree to up front, and they show up in the vast majority of residential contracts across the DC, Northern Virginia, and Maryland market.
The Financing Contingency
The most common contingency Matt Cheney sees in DMV-area contracts is the financing contingency. Most buyers are not paying cash. They are working with a lender, and that loan has to go through underwriting before it can close. Matt Cheney explains that if a buyer’s loan is not approved within the contract’s financing contingency window, the financing contingency gives that buyer a documented way to exit the contract rather than being locked into a purchase they can no longer afford to complete. The contingency period, and the specific terms attached to it, are negotiated as part of the offer and vary from contract to contract.
Buyers should consult a licensed real estate attorney to fully understand the legal implications of any contingency terms before signing.
The Home Inspection Contingency
The second contingency Matt Cheney highlights is the home inspection contingency. Once a contract is ratified, most buyers bring in a licensed inspector to walk the property with them. Matt Cheney explains that if the inspector identifies deferred maintenance, structural concerns, or other significant issues, the inspection contingency gives the buyer options: they can negotiate repairs or credits with the seller, or in some cases exit the contract entirely, depending on how the contingency is written. This period is often one of the more consequential steps in a DMV transaction, since it is when a buyer gets their clearest look at the property’s actual condition beyond what showings reveal.
Why Contingencies Matter for Buyers in the DC Area
In a fast-moving market, it can be tempting to waive contingencies to make an offer more competitive. Matt Cheney explains that before making that decision, buyers should understand exactly what protection they would be giving up. Financing and inspection contingencies exist to give buyers a documented, negotiated off-ramp if a loan falls through or a property turns out to have problems that were not visible during a showing. Whether or not to include, modify, or waive a contingency is a decision best made with a full understanding of the trade-offs involved, and it can vary significantly from one offer to the next depending on the property, the lender, and the competitiveness of the specific listing. No specific result is guaranteed.
Frequently Asked Questions About Real Estate Contingencies
Do all real estate contracts include contingencies?
Most residential purchase contracts in the DMV area include at least a financing and inspection contingency, though the specific terms and timelines are negotiated as part of each individual offer.
Can a buyer waive a contingency to strengthen their offer?
Yes, buyers can choose to waive or modify contingencies as part of their offer strategy, though doing so means giving up the protection that contingency would otherwise provide. This is a decision worth thinking through carefully for each specific property and situation.
What happens if a contingency deadline passes?
Contingency deadlines and their specific consequences are spelled out in the contract language itself and can vary. Buyers with questions about a specific deadline in their own contract should contact Matt directly for guidance on their particular situation.
Are financing and inspection the only common contingencies?
They are the two most common contingencies buyers encounter, though other contingencies, such as an appraisal or a home sale contingency, can also appear depending on the transaction.
Understanding how contingencies work is one small piece of preparing for a confident, well-informed purchase in the DC, Northern Virginia, or Maryland market. Contact Matt directly for a current market analysis tailored to your situation.
Watch Matt Cheney break this down in this video
About Matt Cheney
Matt Cheney is a top-producing real estate advisor with Compass in Washington, DC, guiding buyers and sellers across DC, Maryland, and Virginia through high-stakes moves, from luxury sales to estate settlements, downsizing, and divorce-related transactions. With over $780 million in career sales volume and 23 years of experience, Matt is ranked in the Top 1.5% of agents nationally by RealTrends America’s Best. He is known for calm, strategic guidance and a straightforward approach to complex and sensitive real estate situations.
Matt Cheney | Compass Real Estate is committed to the principles of the Fair Housing Act and the Equal Opportunity Act. All real estate services are provided without regard to race, color, national origin, religion, sex, familial status, or disability.