Contingency planning is defined as a course of action designed to help an organization respond to an event that may or may not happen. Contingency plans can also be referred to as ‘Plan B’ because it can work as an alternative action if things don’t go as planned.

There are three major types of planning, which include operational, tactical and strategic planning.

A business contingency plan is a course of action that your organization would take if an unexpected event or situation occurs. Think of contingency planning as a proactive strategy, whereas crisis management—the other piece of the business continuity puzzle—is more of a reactive strategy.

These are contingencies that are understood by economic agents — their consequences and probabilities are known — but are such that every description of such events necessarily leaves out relevant features that have a non-negligible impact on the parties’ expected utilities.

: not anticipated or expected : not foreseen : unexpected an unforeseen delay unforeseen consequences.

1 : a contingent event or condition: such as. a : an event (such as an emergency) that may but is not certain to occur trying to provide for every contingency. b : something liable to happen as an adjunct to or result of something else the contingencies of war.

Contingencies are conditions that either the buyer or seller (or both) must meet for the sale to go through. For example, a buyer may place an offer on a home, but the offer is contingent on the buyer selling their current home first or contingent on obtaining a mortgage.

“The purpose of any contingency plan is to allow an organization to return to its daily operations as quickly as possible after an unforeseen event. The contingency plan protects resources, minimizes customer inconvenience and identifies key staff, assigning specific responsibilities in the context of the recovery.”

To put it simply, a seller can back out at any point if contingencies outlined in the home purchase agreement are not met. A low appraisal can be detrimental to a sale on the seller’s end, and if they’re unwilling to lower the sale price to match the appraisal value, this can cause the seller to cancel the deal.

Owners whose home is in contingent status can accept a backup offer, and that offer will have precedence if the initial deal does not go through, so if you like a contingent property, it makes sense for you to make an offer on the listing so that you are in position to buy if something goes wrong with that transaction.

The bump clause allows the seller to accept another offer, so long as the seller notifies the original buyers and sees if they will waive their contingency. If not, the buyer accepts the new offer and the first buyer receives the payment they put down.

Contingent offers are risky, but they’re actually quite common. Make sure you’re ready if one comes along, and know how to protect yourself if you do accept one. Lean on your real estate agent if you need help here; they’ll have a good handle on whether contingent offers are smart in your specific situation.

Reasons for Pending Status Contingent, Continue to Show: The seller has accepted an offer that hinges on one or several contingencies. Other buyers can continue to view the property and submit offers while the buyer is working to settle those contingencies.

‘Under Contract’ is probably the most accurate way to describe a pending or ‘contingent’ sale. It means the same as the other statuses above; a buyer and seller have agreed to terms and have executed a contract. But, the contract has yet to go to closing.

The primary reason why a buyer should make their offer contingent on a home inspection is to ensure the home does not have any major deficiencies. It’s almost a guarantee that a home inspector will find issues with every home.

The contingent definition in real estate means the seller of the home has accepted an offer to purchase their home, but for the real estate transaction to be completed, the buyer must meet or bring to fruition whatever terms or “contingencies” have been negotiated in the home-buying contract.

If they still want the home, the home buyer will usually request that the seller complete specific repairs or reduce the price. Negotiating after home inspection is expected with most real estate transactions, so you shouldn’t hesitate to make requests if an inspection yields problems.

An inspection contingency (also called a “due diligence contingency”) gives the buyer the right to have the home inspected within a specified time period, such as five to seven days. It protects the buyer, who can cancel the contract or negotiate repairs based on the findings of a professional home inspector.

Though a home inspection isn’t a requirement before you can get a mortgage, you should still get one. You should also have your real estate agent write an inspection contingency clause into your offer letter. There are a few things you can do to improve your results as a seller when inspection day arrives.

Here are some of the most common things that fail a home inspection.

• Problem #1: Rundown roofing.
• Problem #2: Drainage issues.
• Problem #3: Faulty foundation.
• Problem #4: Plumbing problems.
• Problem #5: Pest infestations.
• Problem #6: Hidden mold.
• Problem #7: Failing heating systems.
• Problem#8: Electrical wiring.