How an inspection contingency works
The contingency is a clause in your purchase contract. It gives you time to inspect the home and decide how to proceed. If you find problems, you can negotiate or cancel within the window. Once the window closes, you usually lose that option.
The contingency protects you, but it works best when you use it well. A quick, thorough inspection and clear, reasonable requests help you get what you need without putting the deal at risk.
A typical timeline
- Contract signed: the inspection period begins
- First few days: you schedule and attend the inspection
- Report arrives: you review it with your agent
- Before the deadline: you send repair or credit requests, accept or cancel
- Seller responds: you agree, counter or walk away under your contingency
Your options after the inspection
- Ask the seller to make specific repairs before closing
- Ask for a credit or price reduction instead of repairs
- Accept the home as it is
- Cancel the contract within your contingency
How to make good requests
Focus on safety issues and big-ticket items, such as the roof, foundation, electrical, plumbing or HVAC. Small cosmetic items usually aren't worth asking for and can weaken your position.
Get contractor estimates when you can. A credit can be simpler than repairs, since you choose who does the work. Your lender may have rules on how much in seller credits can go toward your costs, so check with your loan consultant.
What happens to your earnest money
If you cancel within the contingency period and follow the contract's terms, your earnest money is usually returned. Miss the deadline or cancel for a reason the contract doesn't allow, and you could lose it. Read the wording carefully and keep track of the dates.
Tips for a smooth inspection
- Book your inspector as soon as your offer is accepted
- Attend the inspection and ask questions
- Consider add-ons such as radon or a sewer scope if they fit the home
- Put your requests in writing through your agent
