Contingencies in Maryland: Which Ones to Keep and Which to Waive

In a competitive offer situation, contingencies are the lever buyers use to strengthen their position. Remove them and you look more attractive to sellers. Keep them all and you're protected but potentially less competitive. The right answer is almost never "waive everything" — it's understanding which contingencies protect you from real risk and which can be modified or released strategically.

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The Financing Contingency

What it does: Protects you if your mortgage falls through. If the lender declines the loan before closing, you can walk and get your earnest money back.

Should you waive it? Almost never, unless you're paying cash. Even with a solid pre-approval, loan conditions can change — job status changes, a new debt, an undisclosed issue in underwriting. Waiving the financing contingency means if the loan falls through for any reason, you lose your earnest money.

How to strengthen without waiving: Get a fully underwritten pre-approval before submitting offers. This is the closest thing to a cash offer in a financed transaction. The seller's agent can see that your loan is essentially approved pending appraisal and title — that's a meaningful signal.

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The Inspection Contingency

What it does: Gives you the right to have the home professionally inspected and, depending on how the contingency is written, negotiate repairs, request a credit, or walk away if the results are unsatisfactory.

Should you waive it? Waiving entirely carries serious risk. You're buying a home without knowing what's in it. A $500 inspection can reveal $40,000 in foundation problems, a failed HVAC system, active water intrusion, or knob-and-tube wiring.

The better approach — modified inspection contingency: Maryland contracts allow you to keep an inspection contingency on a modified basis. The most common modification: you can inspect, and you can walk away if you find a major problem, but you waive the right to request repairs or credits for normal maintenance items. This is sometimes called an "as-is" inspection contingency or an informational inspection.

This is a meaningful concession to sellers — they don't have to worry about you coming back with a list of $15,000 in repair requests. But you retain the right to exit if the inspection reveals something genuinely serious. This is the right balance for most competitive situations.

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The Appraisal Contingency

What it does: Protects you if the home appraises below the contract price. If the appraised value comes in at $620,000 on a $650,000 contract, the appraisal contingency gives you options: renegotiate the price, walk away, or pay the gap out of pocket.

Should you waive it? This depends on your cash reserves and how confident you are in the price.

• If you're paying 20%+ down and have additional reserves, you may be able to absorb a modest appraisal gap. Waiving the appraisal contingency (or capping the gap to a specific dollar amount) can strengthen your offer significantly.
• If you're putting 5% down with minimal reserves, you need the appraisal contingency. If the home doesn't appraise and the seller won't renegotiate, you don't have the cash to cover the gap.

The middle ground — appraisal gap clause: Rather than waiving the appraisal contingency entirely, you can include an appraisal gap clause: "Buyer agrees to pay up to $X above appraised value." This tells the seller you're covered for a reasonable gap without giving up all protection.

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The Home Sale Contingency

What it does: Makes your purchase contingent on your current home selling first.

Should you include it? In Montgomery County's current market, sellers with multiple options generally won't accept this contingency. It introduces timing risk and uncertainty they don't need to take on when other buyers are ready to go now.

If you need to sell your current home to afford the next one, the better strategies are: sell first (then buy with a rent-back), use bridge financing, or search for sellers who are open to longer timelines. A home sale contingency should be your last resort in a competitive segment.

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Radon and Other Specialized Contingencies

Maryland homes are routinely tested for radon — it's common and expected. Radon mitigation typically costs $800–$1,500 and is very effective. It's reasonable to keep a radon test as part of your inspection. High radon is not a reason to kill a deal, but you want it disclosed and addressed.

Water tests for well properties, septic system inspections for properties on septic, and lead paint inspections for pre-1978 homes are also standard contingencies that are generally not used as leverage — they're due diligence.

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Frequently Asked Questions

What contingencies should I include in a home offer in Maryland?

For most buyers: keep the financing contingency (unless cash), keep a modified inspection contingency (informational), and evaluate the appraisal contingency based on your down payment and reserves. Home sale contingency should be avoided in competitive situations.

What happens if I waive the inspection contingency?

You give up the right to negotiate repairs, request credits, or exit the contract based on inspection findings. You can still get an inspection for your own information, but the seller has no obligation to address anything. The risk is discovering significant problems after you own the property.

Can I get my earnest money back if I waive a contingency?

Only if you have another active contingency to exercise. If you waive inspection and financing, and then change your mind, you typically lose your earnest money. The contingency is the contractual right to exit — without it, you're committed.

What is earnest money in Maryland?

Earnest money (also called a good faith deposit) is a deposit you put down when your offer is accepted, held in escrow until closing. In Montgomery County, typical earnest money is 1–3% of the purchase price. It counts toward your down payment at closing. You lose it if you breach the contract without a valid contingency to exercise.

How long is the inspection period in Maryland?

Typically 7–15 days from contract ratification, as specified in the offer. In competitive situations, buyers sometimes shorten the inspection period to 5–7 days to make their offer more attractive.

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Trying to Structure a Competitive Offer?

Which contingencies to keep, waive, or modify depends entirely on your financial situation, the specific home, and the competition level. I walk through this with every buyer before they submit an offer.

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