What Contingencies Should You Put in a Home Offer? A Memphis Buyer's Guide

Making an offer on a home can be exciting—and a little nerve-wracking. You’ve found the house you love, you’ve decided what you’re willing to pay, and now you’re looking at the contract wondering:

“What happens if something goes wrong after I make my offer?”

That’s where contingencies come in.

A contingency is a condition in a purchase agreement that must be satisfied for the transaction to move forward. Contingencies can give buyers important protections, but they can also affect how attractive an offer looks to a seller.

So, which contingencies should you consider when buying a home in the Memphis area?

The answer depends on your situation, the property, and the terms of the offer—but here are some of the big ones every buyer should understand.

1. Home Inspection Contingency

This is one of the most important protections for many buyers.

A home inspection gives you the opportunity to have a qualified professional evaluate the home's condition and identify potential issues that aren't obvious during a showing.

That could include things like:

• Roof problems

• Plumbing issues

• Electrical concerns

• HVAC problems

• Foundation or structural concerns

• Water intrusion

• Safety issues

• Deferred maintenance

The inspection contingency can give you options if significant problems are discovered, depending on the terms of your contract.

And remember:a home inspection isn't about finding a perfect house.

Almost every house has something that could be improved. The goal is to understand what you're buying so you can make an informed decision.

2. Financing Contingency

Unless you're paying cash, you'll probably have a financing contingency tied to your mortgage.

This contingency can protect you if you're unable to obtain the financing required to complete the purchase, subject to the terms and deadlines in your contract.

That's one reason getting pre-approved before house hunting is so important.

Pre-approval doesn't guarantee that your loan will close, but it gives you—and the seller—a much better idea of your purchasing power.

Your lender should also help you understand how changes in your financial situation could affect your loan.

Tip:Don't make major purchases, open new credit accounts, or make other significant financial changes during the mortgage process without talking to your lender first.

3. Appraisal Contingency

Here's a situation buyers sometimes don't think about until they're already under contract:

You offer $350,000 for a home, but the lender's appraisal comes back at $330,000.

Now what?

An appraisal contingency can address situations where the property doesn't appraise at the agreed-upon purchase price, depending on the contract terms.

There are several possible ways a buyer and seller might handle an appraisal shortfall. The buyer could potentially renegotiate, bring additional cash to closing, or have other options depending on the contract.

This is especially important when you're making an offer significantly above the price you believe the property will appraise for.

Before deciding whether to include, modify, or waive an appraisal contingency, talk through the financial consequences with your agent and lender.

4. Home Sale Contingency

This one is particularly important if you're currently a homeowner.

If you need to sell your existing home before you can purchase your next one, you may consider making your purchase contingent upon the sale of your current home.

For example:

“I want to buy this house, but I need my current house to sell first.”

A home-sale contingency can reduce your financial risk, but it can also make your offer less appealing to a seller.

Why?

From the seller's perspective, they're taking their house off the market while waiting for another transaction to happen.

There's a big difference between:

“We're going to list our house soon.”

and

“Our house is already under contract and scheduled to close.”

The more certainty you can provide, the stronger your overall offer may be.

5. Title Contingency

You want to make sure you're actually receiving clear and marketable title to the property you're purchasing.

A title search can uncover issues such as liens, ownership disputes, or other problems that need to be resolved before closing.

Title work is an important part of the transaction, and your closing or title professionals can explain what they discover and what needs to happen before you can take ownership.

6. Insurance Contingency

Homeowners insurance is another important consideration—especially before you get too far into the transaction.

Your lender will generally require insurance as part of the mortgage process.

Before committing to a property, buyers should find out whether they can obtain appropriate coverage and what that coverage is likely to cost.

Don't wait until the last minute.

Insurance availability and pricing can vary significantly depending on the property, its age, roof, location, claims history, and other factors.

7. Other Contingencies to Consider

Depending on the property and your circumstances, there may be other provisions worth discussing.

For example:

• HOA or association document review

• Septic or sewer-related inspections

• Well inspection

• Termite or other pest inspections

• Survey requirements

• Specific repairs or seller concessions

• Sale of another property

• Due diligence related to a particular property condition

Not every buyer needs every possible contingency.

That's actually the point.

Your offer should be structured aroundthe risks that matter to you.

Should You Waive Contingencies to Make Your Offer Stronger?

This is where things can get tricky.

In a competitive market, you may hear that buyers should waive inspection, appraisal, or other contingencies to make an offer more attractive.

But there's an important question to ask:

What risk are you taking on by doing that?

Removing a contingency can make an offer more appealing to a seller because it provides more certainty.

But it can also remove an important protection for you.

For example, waiving an inspection contingency could leave you responsible for expensive repairs you discover after the contract is finalized, depending on the circumstances and contract terms.

That doesn't mean contingencies should never be modified or waived.

It means you should understand exactly what you're giving upbeforeyou do it.

The Strongest Offer Isn't Always the One With the Fewest Contingencies

Buyers sometimes assume that the best offer is simply the offer with the highest price and the fewest protections.

That's not necessarily true.

Sellers often care about theoverall strength and certainty of the transaction.

An offer with a solid price, strong financing, reasonable timelines, and well-structured terms may be more appealing than an offer that is slightly higher but comes with significantly more uncertainty.

Your real estate agent can help you understand how different terms may affect the competitiveness of your offer.

So, Which Contingencies Should You Include?

There isn't a universal checklist that works for every Memphis homebuyer.

A first-time buyer purchasing a move-in-ready home with conventional financing may have a very different risk profile from an investor purchasing an older property or a homeowner trying to sell another property first.

The right question isn't:

“What contingencies do other buyers use?”

It's:

“What risks do I need to protect myself against in this particular purchase?”

That's the conversation you should have with your real estate agent, lender, inspector, and other appropriate professionals before submitting an offer.

Buying a Home in Memphis? Don't Just Look at the Price.

When you're making an offer, the purchase price is only one piece of the puzzle.

The contingencies, deadlines, financing terms, closing date, earnest money, and other contract terms can all affect the transaction.

Before you sign, make sure you understand what you're agreeing to—and what happens if something doesn't go according to plan.

The goal isn't to write the most aggressive offer possible. It's to write an offer that protects your interests while giving the seller a compelling reason to say yes.

If you're buying a home in Memphis, Bartlett, Germantown, Collierville, or the surrounding area and aren't sure how to structure your offer, a good first step is to sit down with your real estate agent and talk through your specific situation before you start writing offers.

Kelly Day, SRES, SRS, AHWD, PSA, RENE
Multi Million Dollar Club
Broker Lic # 365811
simpliHŌM
901-289-9227
855-856-9466
[email protected]
https://memphishouselistings.com