Home Buying Contingencies —Explained! [VIDEO]

Ever watch HGTV? One of their home buying shows?

Just like all things TV, they are pretty close to real life…


“Oh great!— the buyers submitted an offer and the seller accepted so they get the ‘congratulations, you just bought a home!’ phone call from their agent and they are now home owners…right?”


If only HGTV was close to real life.  In the real world of real estate, you’re going to want to know a little bit more about the home you’re buying than that you like the color of the walls and the bright kitchen before plopping down however many hundreds-of-thousands-of-dollars you plan on offering for the home.

At least, you should.

Listen here Mr./Ms. potential buyer— one of the most important things to understand as a home buyer when buying a home are the Contingency Periods that protect you and your EMD after opening escrow!

When buying or selling a home, there are periods of time worked into the transaction timeline— the first major portion of which are for the buyer to conduct due diligence and investigations on the property. (see HERE for video explaining buying/selling timeline)


When you’re submitting an offer in California, the default time period for your “contingency period” is seventeen days for property condition contingencies, termite inspections, appraisal contingencies, seller disclosures, local area and natural hazard disclosures (see HERE for a video about important Buyer Disclosures when buying a property), and all due diligence on the property.

Now keep in mind that this is a negotiable time-period, so you could make that TEN days, THIRTY days, FIFTEEN days— whatever you want to offer— but by default, it’s seventeen days.

Got it?

So what this means for you is that starting the day after acceptance of your offer, you have seventeen days to get a home inspection (see HERE for a video all about the Home Inspection), pool inspection, or any other type of inspections you choose, as well as review all the seller’s disclosures, the natural hazard disclosures, local area disclosures, and conduct any other investigations on the property that you would like etc.

During this time period as well, the appraisal should have been completed, at which time you’ll know whether the property was appraised for at LEAST your agreed-upon sales price, and if there are any REQUIRED repairs to be completed in order to satisfy the appraisal.

OR for example, if you’re not comfortable with something in the home inspection report— for example if it says the toilet in the master bathroom is loose, or that there is a roof leak, or the water pressure regulator is going bad, or there is a gas leak in the attic, etc — you get the idea— you will have the opportunity in this seventeen day time-frame to either:

A) Address the concerns with the seller and NEGOTIATE repairs, or a credit or price reduction


B) Back out of the deal if you feel your the issues are not curable.

The same thing goes for the seller disclosures or any other disclosures or information you come across— if something is insurmountable for you, you have the option to back out and in most cases, receive your full Earnest Money Deposit refund. (See HERE for informative video about the Earnest Money Deposit).

The whole point of this time-period is to ensure you as the buyer are completely comfortable with ALL of the information about the property, have the chance to address any concerns and RE-NEGOTIATE with the seller based on newly obtained information, and to protect you and your deposit if you choose to back out.

Now, even after the seventeenth day, the contingencies don’t automatically drop off— in order for them to be removed, you’ll have to SIGN a contingency REMOVAL form.

When you sign this form and remove these contingencies, you are essentially saying to the seller: “I have reviewed the disclosures, I’ve had all the inspections I want to have, I’ve come to an agreement with you on the repairs I’ve requested, (if any), I’ve conducted all the investigations I wish to conduct, and I’m confidently MOVING FORWARD and I plan on CLOSING this deal.”

Now there’s also a default twenty-one day contingency period for being approved for your loan— IF you’re obtaining a loan to purchase the property.  This means that even if you removed the other contingencies, but the loan get’s denied, then you and your deposit are STILL protected, so long as you have not removed the loan contingency yet.

Let’s say after you have removed ALL your contingencies— let’s say you had your home inspection and everything looked great, all the disclosures looked great, the appraisal came in at full value, you got approved for the loan— let’s say AFTER all of this and AFTER you removed all of your contingencies, you just decide, “Hey, you know what, I think I’m just going to back out of this deal.  I don’t want this property anymore.”

Well in that case, you’re putting your Earnest Money Deposit at RISK and you may be liable for other damages as per the contract.

So the bottom line is, you have by default, seventeen days to have all your inspections done, negotiate for repairs or credits, review disclosures, obtain an appraisal at full value, and do all of your due diligence; twenty-one days for your loan.  If anything doesn’t look right to you or you decide not to move forward with the deal, then you can back out prior to removing these contingencies and under normal circumstances, you’ll get your deposit back with no repercussions.

Now, you might be out the cost of the home inspection or appraisal, but hey, if something’s really wrong with the property, that’s cheap insurance compared to moving forward with a purchase that you’ll regret!

If you have any questions about contingency time-periods or anything else Real Estate-related in Southern California, feel free to reach out to us at (619) 537-6016 for tons of other great information!

We aim to be your go-to real estate team for life!

Let us know how we can help you!