Understanding home sale contingencies

Q: What happens if a buyer misses the home sale contingency deadline?

The contract typically gives the seller the right to cancel and keep the home on the market, and in most standard forms the buyer's earnest money is returned because the contingency was not satisfied. Some contracts instead trigger an automatic extension or a renegotiation window. Read the exact language before signing, because whether you can cancel immediately or must give written notice varies by form and by state.

Q: Should a seller accept a contingent offer?

It depends on the market and the buyer's position. In a slow market with few showings, a contingent offer from a buyer whose home is already under contract can be a reasonable risk. In a competitive market with multiple offers, a non-contingent offer is generally worth more than a higher contingent price. Ask how long the buyer's home has been listed and whether it already has an accepted offer.

Written by Samantha SheltonNMLS 1647301Updated September 2026

Sellers weighing a contingent offer with their agent at a kitchen island while reviewing home sale contingencies

This article is general information about contract contingencies and Michigan disclosure duties, not legal or tax advice. Contingency language, cancellation rights and earnest money remedies turn on the exact contract you signed. Consult a Michigan real estate attorney about your situation.

A home sale contingency makes your buyer’s purchase conditional on selling their current home first, and it lets them cancel and recover their earnest money if that sale does not close by an agreed deadline. Put a real number on what you would be agreeing to: nationally in July 2026 the typical home took a median 29 days to go under contract and another 30 days to reach closing, so a buyer who has not listed yet needs roughly two months at the medians before your closing can happen.

That is the entire trade. You get a buyer who is often willing to pay closer to your asking price, and you accept a deadline you do not control on a second transaction with its own appraisal, inspection, and underwriter.

Learn how home sale contingencies work, what a kick-out clause actually does, how to set the deadline and the earnest money, and when a contingent offer is worth taking. If you are earlier in the process, start with our Selling a Home guide.

Key takeaways:

It ties your closing to a second sale: The buyer’s purchase is conditional on selling their existing home inside a negotiated window, commonly written for 30 – 90 days, and your home is effectively off the market for most of it.
A kick-out clause is the seller’s main protection: It lets you keep marketing and accept a backup offer, then gives the contingent buyer a short written notice period, commonly 24 – 72 hours, to drop the contingency or release the contract.
Know the base rate before you decide: Nationally, 6% of contracts were terminated and 12% had delayed settlements in the three months through July 2026, and a home sale contingency stacks a second transaction’s version of those odds on top of your own.

What is a home sale contingency?

A home sale contingency is a clause in a purchase agreement that lets the buyer walk away without penalty, and generally with their earnest money returned, if they cannot sell their current home by a stated deadline. It is a condition on the buyer’s obligation to close, and once it is in the contract it binds you too.

Most forms handle two very different situations under the same heading, and that difference is the most important thing on the page for a seller:

The buyer’s home is not yet under contract: They still have to find a buyer, negotiate, survive an inspection, and reach a closing table. This is the version that carries real risk.
The buyer’s home is already under contract: They have an accepted offer and are waiting on settlement. The risk is narrower, and it usually comes down to whether that buyer’s financing holds.

Ask which one you are being handed before you respond. The language varies by brokerage form, so read the clause rather than the label. Our overview of contingencies in home offers covers the full menu, and home purchase contingencies explains the same clauses from the buyer’s side.

How does a home sale contingency work for the seller?

From the moment you accept, your sale runs on someone else’s calendar, and at the national medians that calendar is about 59 days long: 29 days for the buyer’s home to go under contract, plus 30 more days to close. Those medians come from the National Association of REALTORS® July 2026 REALTORS® Confidence Index Survey, published August 11, 2026. If the buyer’s home is not listed yet, add whatever prep, photography, and pricing time it needs on top of that.

Buyers are not asking for this because they are indecisive. They ask because their lender counts both houses. Under Fannie Mae’s Selling Guide, when a borrower’s current principal residence is pending sale but will not close before the new purchase, both the current and the proposed housing payment must be used to qualify them. The lender may leave the old payment out only with the executed sales contract for the current residence and confirmation that any financing contingencies have been cleared.

That rule explains the behavior. A buyer carrying a $1,800 payment on the old house and qualifying for a $2,400 payment on yours has $4,200 of housing debt in the calculation until that other contract is executed and cleared, which for most borrowers is the difference between approved and denied.¹ The contingency is how they buy time to make that math work.

Three things change for you the day you accept. Showings quietly drop off with your listing status. Your net proceeds date becomes an estimate, which matters if you are buying next; see when a seller gets money after closing. And your leverage shifts, because you now have one buyer instead of a market. Our walkthrough of the selling process shows where this decision sits.

Contingency types and what each one risks for the seller

A home sale contingency is the longest and least controllable of the four contingencies on a typical offer. The others attach to your house; this one attaches to a house you have never seen.

Contingency	What it protects	Typical window	Your best protection
Home sale	The buyer, if their existing home does not sell	30 – 90 days, negotiated	Kick-out clause plus a dated deadline
Inspection	The buyer, if the inspection finds defects	Usually 7 – 14 days after acceptance	A pre-listing inspection and a written response deadline
Appraisal	The buyer, if the home appraises below the contract price	Runs with the lender’s appraisal timeline	A comp packet for the appraiser and a reconsideration of value
Financing	The buyer, if final loan approval does not come through	Usually 21 – 30 days after acceptance	Verify the preapproval before you sign, not after

Two rows deserve a closer look. On the appraisal line, 21% of buyers waived the appraisal contingency in July 2026, but a contract waiver does not always mean what a seller hopes. FHA purchase contracts must carry the amendatory clause, which states that the purchaser is not obligated to complete the purchase, or to forfeit earnest money, unless they receive a written statement of appraised value of at least the contract price.² VA contracts carry a parallel escape clause tied to VA’s established reasonable value.³ Both are required, and both let the buyer proceed anyway if they choose.

A low appraisal is also not automatically final. Fannie Mae and Freddie Mac require lenders to give borrowers a route to request a reconsideration of value, and a borrower may request one ROV per appraisal report. FHFA announced the Enterprise reconsideration-of-value policies on May 1, 2024, and lenders had to have them in place by October 31, 2024, so the process is standard on conventional files today. Nationally, 6% of contracts with delayed settlements ran into appraisal issues in July 2026, so if your comps genuinely support the price, that request is worth making.

On the inspection line, 16% of buyers waived it in July 2026, down from 23% a year earlier, so roughly five of six buyers are keeping the right to renegotiate after they read the report. Our guide to how to address buyer repair requests covers what you owe and what you can decline, and a pre-listing home inspection removes most of the surprise before you get an offer.

How do you protect yourself if you accept one?

Four terms carry almost all of the protection, and none are automatic. Each has to be written in before you sign, because after acceptance you are negotiating from a much weaker position.

Add a kick-out clause with a written notice period

A kick-out clause lets you keep the home on the market after accepting a contingent offer and accept a backup offer, subject to giving the first buyer a chance to step up. When a stronger offer arrives you deliver written notice, and the contingent buyer gets a short window, commonly 24 – 72 hours, to remove the contingency and proceed, or release the contract and take their earnest money back.

It only works if three details are spelled out: how notice is delivered, exactly how many hours the buyer has, and what “removing the contingency” requires. A clause that lets the buyer remove it by simply saying so is worth far less than one requiring proof of funds, a bridge loan commitment, or a cleared financing contingency on their own sale.

Set the deadline as a date, not a duration

Write “the buyer’s home must close on or before November 14” rather than “within 60 days.” Durations invite arguments about when the clock started; a date does not. Then decide in advance what happens when the date passes, because most forms give you a right to cancel on written notice rather than cancelling automatically.

Ask for earnest money large enough to matter

Earnest money on Align’s observed Michigan purchase offers generally runs 1% – 3% of the sales price, or $3,000 – $9,000 on a $300,000 sale. On a contingent offer, ask toward the top of that band, and negotiate for a portion to go non-refundable after a stated date so a buyer who blows the deadline has something at stake. See how earnest money deposits work for who holds the funds.

Keep marketing, and keep a backup offer alive

A backup offer in writing is what makes a kick-out clause more than a threat, and it protects you from the worst version of this deal: 60 days off the market, then restarting from zero. Homes received an average of 2.0 offers nationally in July 2026, so a second offer is realistic but not something to assume will appear on demand.

Should you accept a contingent offer?

It depends on two things you can verify: how far along the buyer’s own sale is, and how much traffic your listing still gets. A contingent offer from a buyer already under contract with a cleared financing contingency is a different animal from one whose home is not listed. In a market averaging 2.0 offers where 19% of homes sell above list, a non-contingent offer at a slightly lower price is frequently worth more than a contingent offer at your number.

Five questions to ask before accepting a contingent offer:

Is the buyer’s home listed, or only about to be? An unlisted home means the 29-day median has not started running. Ask for the MLS number, not a promise.
Is it under contract, and has the financing contingency cleared? That is the exact documentation the buyer’s lender needs to drop the old payment from their debt-to-income ratio, so it tells you about their approval and their timeline at once.
How is it priced against comps, and how long has it been sitting? A home well past 29 days on market is telling you something about its price. If it needs a reduction, your closing date depends on someone else deciding to take less money.
Is the buyer preapproved on your house, and by whom? Ask for a current preapproval with credit pulled, not a prequalification letter. See prequalification versus preapproval and the CFPB’s tools for understanding the purchase process.
How much earnest money is posted, and does any of it go hard? A 1% deposit that stays fully refundable for 90 days is not a commitment; it is a free option on your house.

Honestly, even though it costs us a lead: holding off is always an option. If your showing traffic is healthy, countering with a shorter window and a kick-out clause, or declining outright, is often the better business decision. Weigh both sides with the pros and cons of accepting a contingent offer.

What happens if the contingency is not met?

In most standard forms the contract becomes cancelable rather than automatically cancelled, and the buyer’s earnest money is returned because the condition was never satisfied. Some forms instead trigger an automatic extension or a renegotiation window. Whether you must give written notice, and how long the buyer has to respond, is set by the clause you signed.

Then comes the part sellers underestimate: you are relisting a house the market watched go under contract and come back. Days on market resets, buyers ask what happened, and anything the failed buyer’s inspector found is now something you know.

In Michigan that last point is a statutory duty, not a courtesy. The Seller Disclosure Act, MCL 565.951 et seq., applies to transfers of not less than 1 and not more than 4 residential dwelling units, requires the written statement before you execute a binding purchase agreement, and defines good faith as honesty in fact. A disclosure or amendment delivered after the agreement is signed gives the buyer 72 hours to terminate if it was hand-delivered, or 120 hours by registered mail. Selling “as is” does not erase that duty for defects you know about. Read what a seller’s disclosure is next, review the broader legal considerations when selling a house, and take questions about your specific contract, your cancellation rights, and any earnest money dispute to a Michigan real estate attorney. Align Lending is a mortgage broker, not a law firm and not a listing brokerage. Our walkthrough of how to handle a buyer backing out covers the earnest money question and the relisting decision in detail.

How Align keeps your sale and purchase on one timeline

Selling and buying at once means two closings that have to line up. Samantha builds your next loan around your sale date, together with your agent, so the two dates are planned as one.

She handles your loan herself, with a processor supporting her behind the scenes, and her loans averaged under 14 days from application to clear to close over the last 12 months, across more than 100 loans.

Plan a buy before you sell

Sources: Align Lending loan records, 12 months to October 2026.

FAQ: Home sale contingencies

Here are answers to common questions about home sale contingencies.

What happens if a buyer misses the home sale contingency deadline?

Usually you get the right to cancel and relist, and the buyer’s earnest money is returned because the contingency was never satisfied. Some forms instead trigger an automatic extension or a renegotiation window. Whether you can cancel on the spot or must deliver written notice first depends on the form you signed, so read the clause before the deadline arrives. Our guide to how to handle a buyer backing out covers what happens next.

What is a kick-out clause?

A kick-out clause lets a seller who accepted a home sale contingency keep marketing the property and accept a backup offer. When a stronger offer arrives, the seller gives written notice, and the original buyer typically has 24 to 72 hours to remove the contingency or release the contract. It is the most effective protection for a seller taking a contingent offer, and it has to be in writing to exist at all. See the pros and cons of accepting a contingent offer.

Should a seller accept a contingent offer?

It depends on the market and on how far along the buyer’s own sale is. In a slow market with few showings, a contingent offer from a buyer already under contract can be a reasonable risk. In a competitive market, a non-contingent offer is generally worth more than a higher contingent price, because it closes on schedule. Ask how long the buyer’s home has been listed and whether it has an accepted offer. Our overview of contingencies in home offers compares each type.

How is a home sale contingency different from a financing contingency?

A financing contingency protects a buyer who cannot get final mortgage approval, and it applies to nearly every financed purchase. A home sale contingency is narrower and riskier for you, because it depends on an entirely separate transaction closing on time, including that buyer’s appraisal, inspection, and lender. A buyer can be fully preapproved and still fail a home sale contingency. Our breakdown of home purchase contingencies explains how each clause is written.

The bottom line on home sale contingencies

A home sale contingency lets your buyer cancel and recover their earnest money if they cannot sell their current home by an agreed deadline, and it ties your closing to a transaction you do not control. Price that risk with real numbers: 29 days is the national median to go under contract, 30 more to close, and 6% of contracts terminated in the three months through July 2026. If you accept one, get a kick-out clause with a defined notice period, a deadline written as a date, earnest money toward the top of the 1% to 3% band, and a backup offer in writing.

If you are selling one home and buying the next, talk to Align Lending before you answer a contingent offer. We’ll shop your next mortgage across our lender network, run the debt-to-income math with and without your current payment, and tell you whether bridge financing would let you skip the contingency altogether. Call 248-506-5727 or start online today.

Footnotes:

1. Example figures in this article are hypothetical and for educational purposes only; they do not constitute an advertisement of credit terms or a rate quote under federal or state lending laws. Payment amounts, qualifying ratios, and earnest money amounts depend on the individual transaction, the loan program, and the lender’s underwriting, and are determined by the lender, not by Align Lending. Return to text.

2. Align Lending is not acting on behalf of or at the direction of FHA or HUD. FHA amendatory clause requirements are set by HUD and are subject to change. Return to text.

3. Align Lending works with VA-approved lenders and is not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency. Return to text.

Sources: median days on market of 29, median days to close of 30, 6% of contracts terminated in the past three months, 12% of contracts with delayed settlements, 6% of delayed settlements involving appraisal issues, an average of 2.0 offers received, 19% of properties sold above list price, 16% of buyers waiving the inspection contingency (23% one year earlier), and 21% of buyers waiving the appraisal contingency, National Association of REALTORS®, July 2026 REALTORS® Confidence Index Survey (published August 11, 2026). Requirement that both the current and proposed PITIA be used to qualify a borrower whose current principal residence is pending sale but will not close before the subject transaction, and the exception where the lender obtains the executed sales contract for the current residence and confirmation that any financing contingencies have been cleared, Fannie Mae Selling Guide B3-6-06, Qualifying Impact of Other Real Estate Owned. Borrower-initiated reconsideration of value and the limit of one borrower-initiated ROV per appraisal, Fannie Mae Selling Guide B4-1.3-12, Appraisal Quality Matters; lender implementation date of October 31, 2024, Fannie Mae Selling Notice, “Implementation date for Reconsideration of Value updated to October 31”; Enterprise reconsideration of value policies announced May 1, 2024, Federal Housing Finance Agency. FHA amendatory clause language providing that the purchaser shall not be obligated to complete the purchase or incur any penalty by forfeiture of earnest money deposits absent a written statement of appraised value of not less than the stated amount, and the purchaser’s option to proceed regardless of the appraised valuation, U.S. Department of Housing and Urban Development, Amendatory Clause model document (March 2023). VA escape clause providing that the purchaser shall not incur any penalty by forfeiture of earnest money or otherwise be obligated to complete the purchase if the contract purchase price exceeds the reasonable value established by the Department of Veterans Affairs, U.S. Department of Veterans Affairs, Escape Clause (authority 38 U.S.C. 501 and 3703(c)(1)); 38 C.F.R. § 36.4303(k)(4). Application of the Michigan seller disclosure act to transfers of not less than 1 or more than 4 residential dwelling units, MCL 565.952; delivery of the written statement before the transferor executes a binding purchase agreement and the 72-hour and 120-hour termination rights for disclosures or amendments delivered afterward, MCL 565.954; good faith defined as honesty in fact, MCL 565.960; short title of the seller disclosure act, MCL 565.951. Earnest money deposit range of 1% – 3% of the sales price and observed Michigan deposit amounts, Align Lending broker network purchase-offer data. Kick-out clause notice windows of 24 to 72 hours and the general 30- to 90-day home sale contingency window are common contract practice rather than a legal standard; ranges reflect Zillow’s real estate contingency education pages and Align Lending’s observed Michigan purchase agreements, and the operative terms are always the ones written into your contract.

This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Contract remedies, contingency language, disclosure obligations, and loan program rules change and vary by property, transaction, and program; review your purchase agreement and consult a Michigan real estate attorney, a qualified tax professional, or a licensed loan originator about your situation. Align Lending is an independent Michigan mortgage broker and does not list homes for sale. Figures shown are illustrative, are not a rate quote or an offer of credit, and are subject to change. Align Lending, NMLS #2041154.