An inspection contingency lets the buyer hire inspectors and then request repairs, credits, a price reduction, or the option to walk away if serious issues are found. It protects buyers by ensuring they’re not locked into purchasing a property with undisclosed or unexpected defects. For sellers, it’s a critical phase

A financing contingency gives buyers time to secure a mortgage and protects them if their loan is denied or terms change significantly. If they can’t obtain financing within the agreed period, they can usually cancel the contract and recover their earnest money as long as they followed the contract terms.

An appraisal contingency allows the buyer to renegotiate or cancel if the home appraises for less than the purchase price. From a seller’s perspective, this adds risk that the price may need to be lowered or the buyer may ask you to cover gaps if the appraiser comes in low.

Earnest money is a deposit buyers make with their offer to show they are serious about purchasing the home. It’s usually held in an escrow account and later applied to the buyer’s down payment or closing costs if the sale closes. If the buyer properly cancels under a contingency, they

A seller may keep earnest money if the buyer breaches the contract without a valid contingency or misses key deadlines without agreed extensions. If the buyer simply changes their mind outside contingency periods, the contract often allows the seller to claim the deposit as damages, subject to local law and

A liquidated damages clause sets an agreed amount or cap—often the earnest money—that the seller can keep if the buyer breaches the contract without legal excuse. It’s designed to avoid fights over actual damages by predefining the seller’s remedy, subject to limits under state law. Not all contracts use this,