What are contingencies in a real estate deal?

Contingencies in a real estate deal refer to specific requirements or conditions that must be satisfied for the transaction to proceed. These are critical components of a purchase offer, as they protect both the buyer and the seller by allowing for certain events to occur, typically related to financing, home inspections, or appraisals. For example, a common contingency might include the buyer securing a mortgage, meaning if they are unable to obtain financing, they can back out of the deal without penalties.

This understanding of contingencies is essential for both parties involved in a real estate transaction. It provides a structured framework within which the deal can move forward depending on the fulfillment of the stipulated conditions. Hence, identifying and negotiating these contingencies is a crucial aspect of the real estate process, making the provided answer a key concept in understanding real estate transactions.