Home Offer Contingencies in California: What to Include in Your Offer

What Is a Contingency?

When you're buying or selling a home in San Francisco or Marin, you'll often hear the term "contingency." A contingency is simply a condition that must be met for the sale to move forward. In California, contingencies are written right into the standard Residential Purchase Agreement, and they protect both buyers and sellers by allowing time for due diligence and making sure everyone understands what has to happen before closing.

So which contingencies are most common in today's offers, and which ones should you actually put in yours?

The 5 Most Common Contingencies

1. Inspection Contingency

Perhaps the most familiar, an inspection contingency gives the buyer time to have the property professionally inspected. If the inspection reveals issues, such as structural concerns, roof leaks, or outdated electrical systems, the buyer can:

• Request repairs or credits
• Renegotiate the price, or
• Walk away from the deal without penalty

This contingency provides peace of mind and helps buyers avoid surprises after moving in. I often point out the phrase "at Buyer's sole discretion," which appears in the contract. It's a quick way to understand that the inspection contingency gives the buyer the right to walk away from the deal. In most cases, the listing agent won't even press for an explanation, since the contract doesn't require one, though buyers sometimes use this period to negotiate repairs or credits instead of canceling outright.

2. Financing (Loan) Contingency

Unless a buyer is paying all cash, their offer typically includes a financing contingency. This ensures the buyer can secure a mortgage for the purchase. If their lender doesn't approve the loan, the contingency allows them to cancel the deal and recover their deposit.

3. Appraisal Contingency

When a loan is involved, lenders require an appraisal to confirm the home's value matches (or exceeds) the purchase price. An appraisal contingency protects the buyer if the property appraises for less than the agreed price. In that case, the buyer can negotiate, pay the difference, or walk away.

4. Title Contingency

A title search verifies that the seller has clear ownership of the property and the legal right to sell. A title contingency protects the buyer if liens, boundary disputes, or other ownership issues are discovered. Knowing the details is important, and the title company will do a title search before offering Title Insurance, which lenders will typically require.

5. Sale of Buyer's Property Contingency

Less common in competitive markets, this contingency allows the buyer to make their purchase dependent on selling their current home. While it can provide security for the buyer, many sellers prefer cleaner offers without this condition.

Which Contingencies Should You Put in Your Offer?

There's no single "right" set of contingencies to include. It depends on your financing, your risk tolerance, and how competitive the property is. As a general rule for San Francisco and Marin buyers:

• ✓Financing with a loan: Most buyers should include the inspection, loan, and appraisal contingencies, plus title.
• ✓Competitive multiple-offer situation: Buyers often shorten contingency periods rather than removing them, or do pre-offer inspections so they can write a stronger offer with confidence.
• ✓Paying all cash: The loan and appraisal contingencies usually drop away, but keeping an inspection and title contingency is still smart.

The contingencies you include directly shape how strong, or how risky, your offer looks to a seller, so this is a conversation to have with your agent before you write.

What Happens If You Waive a Contingency?

In hot Bay Area markets, some buyers waive certain contingencies to make their offer more competitive. Waiving a contingency removes that protection: if you waive the appraisal contingency and the home appraises low, you're on the hook for the difference; waive the loan contingency and your deposit can be at risk if financing falls through. Waiving can absolutely win a deal, but only do it with a clear understanding of the financial exposure, ideally after pre-offer inspections and a solid loan pre-approval.

Why Contingencies Matter

For buyers, contingencies are safeguards that make a huge financial decision less risky. For sellers, understanding contingencies helps you evaluate the strength of an offer and anticipate potential roadblocks.

In the Bay Area, where the market can move quickly, contingencies often become a point of negotiation. Some buyers waive certain contingencies to make their offer more competitive, but that comes with risks that should be carefully weighed.

Frequently Asked Questions