What Contingencies Should I Include in My Offer?

Inspection Contingency

The inspection contingency gives you a defined period to complete physical inspections and decide whether to proceed based on findings. The default period in the California Residential Purchase Agreement is 17 days, though this is negotiable. During this time you can inspect the property, review the report, and either move forward, request repairs, or cancel the contract.

Loan Contingency

The loan contingency protects you if your financing is not approved. If you cannot secure a loan commitment within the specified period, you can cancel and recover your deposit. This is a critical protection for buyers who need financing to complete the purchase.

Appraisal Contingency

The appraisal contingency protects you if the property appraises below the purchase price. If the appraisal comes in low, you generally have the option to renegotiate, cover the difference, or withdraw from the transaction.

When Contingencies May Be Shortened or Removed

In competitive multiple-offer situations, buyers sometimes shorten contingency periods or remove contingencies to make their offers more attractive. However, removing contingencies increases your risk. You may lose your earnest money deposit if you withdraw after contingencies are removed. Discuss the right strategy with your agent based on your specific situation and current market conditions.

Additional Standard Contingencies in the California Purchase Agreement

Beyond loan, appraisal, and property investigation, the standard California Residential Purchase Agreement includes several other contingency provisions that may apply depending on the property and transaction. These cover areas such as:

• Seller documents — review of disclosures, reports, and other documents the seller is required to provide
• Title review — verification that the title is clear and insurable
• Common-interest disclosures — applicable when the property is in a community association, PUD, or similar
• Leased or liened items — when property includes leased solar panels, water softeners, or other encumbered items
• Other transaction-specific matters — conditions tailored to the particular property or situation

Some buyers also include a home sale contingency if they need to sell their current home first. Any contingency beyond the standard provisions is negotiable and may affect how competitive your offer appears, but it can be essential depending on your situation.

Contingencies Are Your Protection

Contingencies are an important protection in any real estate transaction. Discuss the right strategy with your agent based on your specific situation and the current market conditions. There is no one-size-fits-all approach.