What is a contingency in a home purchase contract?

A contingency is a condition written into the purchase contract that has to be satisfied for the deal to move forward, such as the buyer securing financing, the home passing inspection, or the appraisal coming in at or above the contract price. If a contingency isn't met by its deadline, it typically gives the buyer a way to renegotiate or cancel the contract and get their earnest money back. Reading these deadlines carefully at signing protects both the deal and the deposit.