Offer Contingencies Explained

Understanding Offer Contingencies: What Buyers and Sellers Need to Know

Buying or selling a home in Massachusetts isn’t just about the price it’s about the terms. On a recent episode of Talk Real Estate Roundtable, our team at Boston Connect Real Estate broke down one of the most important (and often misunderstood) parts of the transaction: offer contingencies.

Whether you’re a buyer preparing to write an offer or a seller reviewing one, understanding contingencies can help you avoid surprises, protect your interests, and keep a deal together from offer to closing 

What Is a Contingency?

A contingency is a condition written into an offer that must be met for the transaction to move forward. If that condition is not satisfied, the buyer may have the right to renegotiate or walk away without losing their deposit.

Contingencies are not “red flags.” They are safeguards that clarify expectations and outline how risks are handled during the transaction.

Purchase Price: More Than Just a Number

The purchase price itself is a contingency. Buyers and sellers alike must understand market value, not just asking price.

• Buyers should be educated using comparable sales (comps) from the last 6 months

• New construction pricing is often firmer due to rising material and labor costs

• Overpricing can lead to appraisal issues later even if the offer is strong

A common challenge we see is buyers (or family members advising them) relying on outdated market assumptions. In today’s market, especially with desirable properties and new construction, “you never pay full price” is often no longer true.

Home Inspection Contingency (and the New Massachusetts Rules)

One of the biggest changes in recent years is how home inspection contingencies are handled in Massachusetts.

Buyers can no longer simply “waive” a home inspection in the offer. Instead, the contract now requires buyers to choose how inspection results will be evaluated, such as:

• Buyer’s sole discretion

• An aggregate repair threshold (for example, repairs exceeding $10,000)

A home inspection is designed to:

• Identify material defects

• Flag safety concerns

• Highlight deferred maintenance

It is not meant to create a perfect home. Cosmetic issues and personal preferences like wanting new appliances are not the same as defects.

Mortgage Contingency: Protection for Buyers and Sellers

If a buyer is financing their purchase, a mortgage contingency is critical.

This contingency protects the buyer if they cannot obtain financing despite making a good-faith effort. It also reassures sellers that the buyer has taken the necessary steps to qualify.

Key components include:

• Type of loan (Conventional, FHA, VA, portfolio, etc.)

• Loan amount and interest rate cap

• Deadlines for application and commitment

A pre-approval letter is essential. Without one, an offer is incomplete and risky for the seller.

Cash buyers should also expect to provide proof of funds this is standard practice, not an insult.

Appraisal Contingency and Appraisal Gaps

An appraisal protects the lender by ensuring the home is worth the agreed-upon price.

If the appraisal comes in below the purchase price, a gap is created. Buyers then have three options:

1. Renegotiate the price

2. Bring additional cash to closing

3. Walk away (if protected by the contingency)

In competitive markets, appraisal gaps are common and they can be stressful. Clear expectations and experienced negotiation can often keep the deal together.

Home Sale Contingency: The Domino Effect

Many buyers need to sell their current home before purchasing their next one. A home sale contingency allows for this but it also introduces risk for sellers.

To balance that risk, sellers may include a 48-hour kick-out clause, allowing them to continue marketing the property and require the buyer to proceed without the contingency if another offer comes in.

While not ideal, these contingencies are often necessary and manageable with the right strategy.

Why Professional Guidance Matters

Contingencies are not one-size-fits-all. The wording, timelines, and structure of each contingency can dramatically affect the outcome of a transaction.

At Boston Connect Real Estate, we:

• Educate buyers on realistic expectations

• Prepare sellers for potential hurdles

• Anticipate issues before they derail a deal

• Navigate changing laws and market conditions

The goal is always the same: a smooth transaction with no surprises.

Thinking About Buying or Selling?

If you’re preparing to make a move or reviewing an offer and feeling unsure our team is here to help. A thoughtful, well-structured offer can make all the difference.

📞 Contact Boston Connect Real Estate to schedule a one-on-one consultation
🎙️ Listen to more episodes of Talk Real Estate Roundtable for real-world insights and expert guidance