Inspection Contingency
An inspection contingency is a clause in a purchase agreement that allows the buyer to have the property inspected within a specified period of time.
If significant issues are discovered during the inspection, the buyer may request repairs, negotiate credits, or in some cases cancel the contract without penalty. This contingency protects buyers by giving them time to evaluate the home's condition before fully committing to the purchase. It is often paired with a financing contingency and appraisal contingency.
In competitive markets, some buyers waive the inspection contingency to make their offer more attractive. This is a significant risk — without the contingency, you lose the right to back out over condition issues and your earnest money could be at stake. Weigh the tradeoff carefully with your agent and loan officer.
Why This Matters: The inspection contingency is one of the most important protections in your purchase contract. Understanding when it helps you — and the risk of waiving it — is essential for making a smart offer.
Common question
What is an inspection contingency?
A contract clause that gives you a set period to have the property inspected. If major issues are found, you can request repairs, credits, or cancel the contract without losing your earnest money.
Should I waive the inspection contingency?
Waiving it can make your offer stronger in a competitive market but removes your right to back out based on the inspection. Only waive if you understand the risk and are comfortable with it.
Related Mortgage Terms
Wondering whether to include an inspection contingency? We can help you weigh the risks and benefits.
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