What are the typical buyer contingencies?

The typical buyer contingencies are:

1. Buyer's inspection contingency This gives the buyer the right to inspect the property. The buyer has the option to cancel the transaction based on the inspection contingency, ask for repairs, ask for a credit, or both. If the seller does not agree to your terms the buyer can cancel the transaction and in this situation, the buyer should get their earnest money back. The seller typically can not back out during this time frame. It is important the buyers respond within the time frames in the contract or you could waive your contingency in certain states. If the buyer waives this contingency they are waiving the right to inspect the property. 

2. Buyer's appraisal contingency This states that the offer is contingent on the buyer's appraiser appraising the property at the purchase price. If the appraisal comes in under the purchase price the buyer can ask the seller to lower the price to the appraised value. If the seller does not lower the price the buyer can back out of the transaction and the buyer should get the earnest money back. If the buyer waives the contingency the buyer is stating they will make up the difference of a low appraisal or potentially lose their earnest money if they do not move forward with the transaction.

You can also state the amount of money you are willing to cover for a low appraisal. If for example you are paying $2,000,000 for a home and you think it might only appraise for $1,900,000, you can state that you are willing to cover $50,000 for the low appraisal instead of removing the contingency and taking the risk of covering the entire $100,000.

3. Buyer's Finance Contingency This states the buyer will make a good faith effort to get a loan and typically make a loan application within a certain time frame. If they fail to do either one they could lose their earnest money. If they make a loan application on time and make a good faith effort to get a loan and are denied they should get back their earnest money when they provide the denial letter to the seller.  If the buyer removes the contingency they are stating that if that can't get a loan the seller potentially would get their earnest money. 

Unless the buyer releases the earnest money to the seller a mediator would make the ultimate decision. 

If the buyer removes all their contingencies, they are basically stating that if for any reason besides default by the seller the home does not close and close on time, the seller will get the buyer's earnest money.