What is a financing or appraisal contingency?

A financing contingency protects you if your lender is unable to approve your loan, allowing you to cancel the contract and recover your earnest money as long as you have acted in good faith. An appraisal contingency protects you if the home appraises for less than the purchase price, giving you the right to renegotiate, ask the seller to lower the price, or cancel the contract. Under the standard Arizona purchase contract, these contingencies are typically included unless explicitly waived. Both have deadlines, and you must provide required documentation and notices on time or you risk losing the protection. Waiving these contingencies makes your offer stronger but increases your financial risk if something goes wrong.