Real estate is "location, location, location." Real estate contracts are "contingencies, contingencies, contingencies." There's usually nothing more important in a real estate contract than the contingencies.

Contingencies in a sales contract give either the seller or a way to void the contract if certain timelines or conditions aren’t met. Here's a common example. A buyer makes an offer on a new home before selling her current home. The buyer can't get financing to buy the new home until her current one sells, so she makes her offer contingent upon the sale of her current home.

There is always a "fuse" on such a contingency. If the buyer can get her present home sold within a certain time period, then it's a deal. But if she can't sell within the specified time, the seller has the option of backing out of the deal.

It's rare that a seller will accept this kind of contingency, paticularly if the market is good and demand is high. However, new home builders are often willing to accept an offer contingent upon the sale of an existing home.

Every contract is unique, and there are as many possibile contingencies as there are possible contracts. But some of the most commonly seen contingencies are:

Financing. Contingencies that depend on the buyer being able to obtain financing are very common.

Home Inspections. Probably the most common type of contingency is the "contingent upon satisfactory completion of inspection". These might include inspection by a qualified home inspector for hidden defects, or pest inspections, water and sewage system inspections, radon or mold inspections, and so on.

Appraisal. It’s not unusual for a buyer to have a contingency that requires a formal appraised value at or above the purchase price. Both sides win when an appraisal shows that the home is worth at least as much as the buyer wants to buy it for, so there usually aren't any problems with this.

Remember, just like everything else in real estate contracts, contingencies are negotiable. Be careful before signing that you are comfortable with all contingencies included in your contract. And be sure to take time to think about what contingencies you might like to have added. Your buyer's agent can help!