Should I Accept a Contingent Offer on My Los Angeles Home?

By Natalie Novarro, REALTOR®
Sotheby’s International Realty – Beverly Hills
Serving the Hollywood Hills • Sunset Strip • Surrounding Los Angeles Neighborhoods

You received an offer on your Los Angeles home.

The price looks good.

Maybe it’s even the highest offer you’ve received.

But there’s a catch:

The offer has contingencies.

Maybe the buyer needs to complete inspections.

Maybe the home needs to appraise.

Maybe the buyer still needs final loan approval.

Or perhaps the buyer needs to sell their current home before they can purchase yours.

Should you accept it?

Maybe. A contingent offer isn’t automatically a bad offer.

But as a seller, you need to understand exactly what the buyer’s contingencies are, how much uncertainty they create, how long they remain in place, and how the offer compares with your other options.

The highest price isn’t always the strongest offer.

Here’s how I would evaluate it.

1. What Is a Contingent Offer?

A contingency is a condition written into the purchase agreement that must be addressed according to the terms of the contract.

Depending on the contingency and the contract, it may give the buyer certain rights if the condition isn’t satisfied.

Common contingencies in a California residential transaction can involve:

investigation of the property
appraisal
financing
review of certain documents
title
and, in some transactions, the sale of the buyer’s existing property

The important thing for a seller is not simply whether an offer has contingencies.

It’s which contingencies it has and what risk each one creates.

2. An Inspection Contingency

An investigation or inspection contingency generally gives the buyer time to investigate the property and decide whether its condition is acceptable under the terms of the purchase agreement.

The buyer may conduct a general inspection and potentially bring in specialists to evaluate things such as:

roof
plumbing
electrical
HVAC
foundation
sewer
drainage
pool
other property-specific concerns

If inspections uncover issues, the buyer may request repairs, credits or other changes.

That doesn’t necessarily mean the seller has to agree to everything the buyer requests.

But while an applicable investigation contingency remains in place, the buyer may have contractual rights relating to their investigation and approval of the property.

For a seller, I would pay close attention to how long that contingency remains in place and whether there are known property issues that could become important during inspections.

3. An Appraisal Contingency

An appraisal contingency becomes particularly important when the buyer is financing the purchase.

Suppose you accept an offer for $2 million.

The appraisal comes back at $1.9 million.

That doesn’t automatically mean you have to reduce the price to $1.9 million.

But if the buyer has an applicable appraisal contingency, the low appraisal may give the buyer contractual options depending on the exact terms of the agreement.

The buyer might ask you to reduce the price.

They might contribute additional cash.

The parties might negotiate somewhere in the middle.

Or the transaction could potentially be affected if the contingency isn’t satisfied.

As the seller, I would look at the appraisal contingency alongside the buyer’s financing and financial strength—not in isolation.

4. A Loan or Financing Contingency

A loan contingency addresses the buyer’s ability to obtain the financing contemplated by the purchase agreement.

A preapproval is important, but it isn’t necessarily the same thing as final loan approval and funding.

The lender may still need to review:

income
assets
credit
property information
appraisal
underwriting conditions
other financial documentation

If I’m representing the seller, I want to understand as much as reasonably possible about the buyer’s financial position before recommending that my client take the home off the market for that buyer.

How strong is the preapproval?

Has the lender reviewed the buyer’s documentation?

How much is the buyer putting down?

Is the financing straightforward or unusually complicated?

What are the contingency timelines?

Those details can matter just as much as the number written at the top of the offer.

5. A Home-Sale Contingency Is Different

This is the one I would examine especially carefully.

A buyer may write an offer that is contingent upon selling their existing home.

In other words:

They want to buy your house—but first they need something to happen with theirs.

That introduces another property and potentially another transaction into your sale.

Now your closing may depend not only on your buyer, but also on:

whether their home is listed
whether it attracts a buyer
whether that buyer qualifies
whether their inspections go well
whether their appraisal works
whether their financing is approved
and whether their transaction actually closes

That doesn’t automatically make the offer unacceptable.

But it does add another layer of risk.

6. If the Buyer Has to Sell Their Home, Ask How Far Along They Are

Not all home-sale contingencies are equal.

Consider these two buyers.

Buyer A

They need to sell their home before purchasing yours.

Their home isn’t listed yet.

They haven’t selected an agent.

They don’t know exactly what it’s worth.

They hope to put it on the market sometime soon.

Buyer B

They also need to sell their home.

But their property is already in escrow with a qualified buyer, inspections are complete, the appraisal is done and they’re approaching closing.

Those may technically both involve the sale of another property.

But from a seller’s perspective, they represent very different levels of uncertainty.

If a buyer’s offer depends on another home selling, I want to know exactly where that transaction stands.

7. What Would I Want to Know About the Buyer’s Property?

If my seller is considering a home-sale-contingent offer, I would want as much relevant information as the contract and circumstances allow us to evaluate.

For example:

Is the buyer’s property already listed?

If not, when will it be listed?

What is the asking price?

How was that price determined?

How long have comparable homes been taking to sell?

Is the property already under contract?

If so, what contingencies remain in that transaction?

When is it scheduled to close?

Does the buyer need the proceeds from that sale to purchase your home?

The more uncertainty surrounding the buyer’s sale, the more carefully I would evaluate the offer.

8. The Highest Offer Isn’t Necessarily the Strongest Offer

This is one of the biggest mistakes sellers can make when comparing offers.

Imagine you receive two offers.

Offer A: $2,050,000
Buyer needs to sell another home first and has several other contingencies.

Offer B: $2,000,000
Buyer has strong financing, fewer uncertainties and a straightforward path to closing.

Which is better?

You cannot answer that based on price alone.

Offer A is $50,000 higher.

But that additional $50,000 only matters if the transaction actually closes.

That doesn’t mean Offer B is automatically better either.

It means the seller needs to compare price, terms and probability of performance together.

9. Look Beyond the Purchase Price

When I’m reviewing an offer for a seller, I’m looking at the entire package.

That includes things such as:

Purchase price

Down payment

Financing

Proof of funds

Contingencies

Contingency periods

Deposit

Requested credits or concessions

Closing timeline

Possession

Other terms

And if there’s a home-sale contingency:

The status and strength of the buyer’s existing sale.

A slightly lower offer with strong terms can sometimes produce a better outcome than a higher offer with substantially more uncertainty.

10. How Long Will the Contingencies Remain?

The length of a contingency matters.

The longer significant contingencies remain unresolved, the longer the seller may be exposed to uncertainty.

Contingency periods are contractual and can be negotiated.

So rather than simply asking:

“Does this offer have an inspection contingency?”

I would also ask:

“For how long?”

The same applies to appraisal, financing and other contingencies.

An offer with clearly defined, reasonable timelines may look very different from one that leaves major questions unresolved for an extended period.

11. What Happens to My Listing While I Wait?

This is especially important with a home-sale contingency.

Once you accept an offer, your property’s status changes and the market now sees that you are in a transaction.

Meanwhile, other buyers may move on and purchase something else.

If your buyer’s contingency later prevents the transaction from closing, you may find yourself returning to the market weeks later.

That doesn’t mean you should never accept a contingent offer.

It means you need to understand what you’re giving up in exchange for accepting that particular buyer’s terms.

12. What If I Have No Other Offers?

This changes the conversation.

Suppose your home has been on the market for 75 days.

You’ve had showings but no serious offers.

Then a well-qualified buyer writes an offer at a reasonable price—but they need to sell their existing home.

Would I automatically reject it because of the contingency?

No.

I’d evaluate it.

How saleable is their property?

Is it already listed?

Is it priced realistically?

Is it already in escrow?

How much time are they requesting?

How motivated are they?

What protections does your contract provide?

And what is the likelihood that another buyer will appear with equal or better terms if you say no?

A contingent offer may be worth considering when the alternative is continuing to wait for an unknown buyer.

13. What If I Have Multiple Offers?

Now the seller may have more leverage.

If several buyers want the property, we can compare not only price but also the risk contained in each offer.

One buyer might offer more money but have more contingencies.

Another may offer slightly less but have stronger financing.

Another may have no home to sell.

Another may offer a larger down payment.

This is why I don’t recommend choosing an offer based solely on the highest purchase price.

The goal is not necessarily to accept the offer with the biggest number.

The goal is to choose the offer whose price and terms together best serve the seller’s objectives.

14. Can I Counter the Contingency?

Potentially, yes.

An offer isn’t necessarily something you must either accept exactly as written or reject entirely.

A seller can potentially counter terms of an offer.

Depending on the situation, negotiations might involve:

contingency periods
price
closing date
credits
possession
other contractual terms

How a seller should counter depends on the specific offer and market conditions.

If the buyer is asking you to accept additional risk, you should understand exactly what you’re receiving in exchange for taking that risk.

15. Should I Accept a Contingent Offer?

There is no universal answer.

I would look at:

How strong is the price?

What contingencies are included?

How long do they remain?

How financially strong is the buyer?

How much is the buyer putting down?

Does the buyer need to sell another property?

If so, where is that property in the selling process?

Do you have other offers?

How long has your home been on the market?

How likely are you to receive another comparable offer?

What matters most to you—highest possible price, certainty, timing, flexibility or some combination?

Then I would compare the risk with the reward.

A contingent offer can be a perfectly reasonable offer.

But the seller should understand exactly what needs to happen before that buyer is fully committed to closing.

Frequently Asked Questions

Is a contingent offer bad for the seller?

Not necessarily. Most residential purchase agreements contain some contingencies. The important questions are what the contingencies are, how long they remain, and how much uncertainty they create for the seller.

What are the most common contingencies in a California home purchase?

Common contingencies can involve property investigations, appraisal and financing, along with review of certain documents and other contract-specific matters. Some buyers also make their purchase contingent on selling another property.

Should I accept an offer contingent on the buyer selling their home?

It depends. Look at the status of the buyer’s property, whether it is already listed or in escrow, the strength of that transaction, the proposed timelines, your other offers and your own property’s market position.

Is a cash offer automatically better than a financed offer?

No. Cash eliminates certain financing-related risks, but price, contingencies, closing terms, proof of funds and the buyer’s overall ability to perform still matter. Every offer should be evaluated as a whole.

Is the highest offer usually the best offer?

Not always. A higher offer can contain terms that create additional risk or cost for the seller. Net proceeds, financing, contingencies, credits and likelihood of closing all matter.

Can a seller negotiate a buyer’s contingencies?

Offer terms and contingency periods can potentially be negotiated as part of the offer and counteroffer process. The seller should review the specific contract with their real estate professional before responding.

What happens if a buyer’s contingency isn’t satisfied?

That depends on the contingency, the contract language, whether it has been removed, applicable deadlines and the specific circumstances. Sellers should not assume a buyer either can or cannot cancel without reviewing the executed agreement.

Have a Contingent Offer on Your Los Angeles Home?

If you’ve received an offer on your Los Angeles home and you’re trying to decide whether the terms are strong enough to accept, don’t look at the purchase price alone.

The strongest offer is the one that makes sense when you consider price, financing, contingencies, timing, risk and the buyer’s ability to actually close.

And if the buyer needs to sell another property first, I would want to understand that transaction almost as carefully as I understand yours.

I specialize in luxury and architectural homes throughout Los Angeles, with a focus on the Hollywood Hills and Sunset Strip.

If you’re thinking about selling—or you’re trying to understand how to evaluate the offers you’re receiving—visit the Contact page or call/text 323-719-3360.

I’m always here to help.

About the Author

Natalie Novarro is a real estate agent with Sotheby’s International Realty in Los Angeles, specializing in the Hollywood Hills and Sunset Strip.

With over 20 years of experience and more than $100M in career sales, she works with buyers, sellers, and investors throughout Los Angeles.

For more information or to get in touch, visit the Contact page or call/text 323-719-3360.

This article is for general informational purposes only and is not legal advice. Contingencies, cancellation rights, deposits, notices and contractual obligations depend on the specific purchase agreement and circumstances. Buyers and sellers should review their executed transaction documents with their real estate professional and consult a qualified California real estate attorney when legal advice is needed.