What's the difference between an inspection contingency and an appraisal contingency?

What's the difference between inspection and appraisal contingencies?

You want to understand how inspection and appraisal contingencies differ in your purchase contract. Both contingencies protect you during the buying process, but they cover different aspects of the home and transaction. An inspection contingency lets you hire a professional inspector to examine the home's condition—things like electrical systems, plumbing, roof, foundation, and other structural elements. If the inspector finds problems you don't want to handle, you can negotiate repairs with the seller or walk away from the purchase.

An appraisal contingency protects you if the home doesn't appraise for the purchase price. The lender orders an appraisal to confirm the home's market value supports the loan amount. If the appraisal comes in lower than your offer, this contingency typically lets you renegotiate the price, bring extra cash to closing, or cancel the contract. Check your purchase agreement to see the specific timelines for each contingency—inspection periods commonly run 7-10 days, while appraisal contingencies often align with your loan approval timeline. Talk with your real estate agent about how these contingencies work in your local market and what steps you need to take to use them if issues come up.