Have you heard your agent say, “We need to remove contingencies,” and wondered what that really means? If you are buying in Pasadena or the greater Los Angeles area, understanding contingencies can protect your budget and your peace of mind. You want to move forward confidently, not worry about surprise repairs or financing snags. In this guide, you will learn what the three main contingencies do, common timelines in our market, local Pasadena factors to plan for, and how to negotiate smartly. Let’s dive in.
What a contingency means
A contingency is a built‑in protection in your purchase contract. It gives you time to verify the property condition, confirm the value, and finalize your loan before you are fully committed. In California, most offers use standard California Association of Realtors forms that spell out these protections and the exact deadline to remove them in writing. If you cancel for a valid contingency reason within your deadlines, your earnest money deposit is typically refundable.
Keep in mind that the purchase agreement controls everything. Verbal promises are not enough. Removing a contingency is a legal milestone, so you always want to understand the timing and wording in your contract before you sign or remove anything.
The three key contingencies
Inspection contingency
This gives you time to investigate the property and review seller disclosures. You can order a general home inspection and, if needed, specialized inspections such as pest or wood‑destroying organisms, roof, HVAC, plumbing, electrical, sewer scope, chimney, geological or soil, and mold. If you discover issues, you can request repairs, ask for a credit, renegotiate the price, or cancel within the contingency.
Common local timelines for the inspection period in Southern California range from 10 to 17 days. Shorter windows, such as 5 to 7 days, are sometimes used to be more competitive. If you are buying an older Pasadena home or a hillside property, plan for additional specialist inspections and schedule them quickly after acceptance so you do not miss your deadline.
Negotiations often center on repair requests versus credits. Credits at closing are common if sellers prefer not to manage contractors. Some sellers propose a repair cap or agree only to items necessary for code or structural pest clearance. In very competitive situations, buyers sometimes accept a more limited inspection period or even waive the contingency, which raises risk and should be considered with care.
Appraisal contingency
An appraisal contingency protects you if the lender’s appraised value comes in below the purchase price. If that happens, you can ask for a price reduction, bring in extra cash to cover the gap, request a reconsideration of value, or cancel under the contingency if you kept it.
Appraisals are usually ordered early in loan processing and often take about a week or two from the time they are ordered. In some contracts the appraisal contingency is separate, and in others it is bundled with the loan contingency. In competitive markets, some buyers offer appraisal gap coverage or waive the appraisal contingency. Only consider this if you are prepared to bring extra cash and understand your financial exposure.
Loan contingency
Your loan contingency gives you time to secure financing. You remove it when your lender has provided approval that meets the contract terms. If your financing does not come through within the contingency period and you cannot resolve it, you can typically cancel and protect your deposit.
Common local timelines for the loan contingency are 17 to 21 days, though buyers sometimes shorten or extend them depending on the situation. Pre‑approval is helpful, but final approval depends on underwriting, appraisal, and your documentation. Removing the loan contingency without a firm approval is risky, so work closely with your lender on timing.
How the three work together
These protections interact. You usually handle inspections and disclosures first, continue loan processing, then review the appraisal, which can affect final loan approval. You can remove contingencies in stages. For example, you might remove the inspection contingency once you are satisfied with the condition, but wait on the appraisal and loan contingencies until the valuation and underwriting are complete.
Pasadena factors to consider
Older homes and specialty inspections
Pasadena’s housing stock includes many early 20th‑century Craftsman and mid‑century homes. For these properties, it is smart to budget and plan for targeted inspections. Common issues include outdated electrical systems such as knob‑and‑tube wiring, older plumbing like galvanized piping or clay sewer lines, roof wear, termite or wood‑destroying organism damage, and potential foundation or seismic retrofit needs. A sewer scope and pest inspection are frequent add‑ons, and a structural or geotechnical review may be wise if there are signs of movement.
Permits and historic status
Unpermitted additions or renovations are a frequent local concern. Review permit history and consider whether you want the seller to provide proof of permits or to pursue retroactive permits where feasible. Some Pasadena properties are in historic districts or have local designations. That can affect what you can change and the cost of work, so verify status before removing contingencies.
Hillside and soils
Homes on slopes or in hillside areas may face soil movement or stability issues. If you see signs of settlement or if the location suggests it, consider a geotechnical or structural evaluation and plan your contingency timeline to accommodate that scheduling.
Municipal and HOA requirements
City or county compliance items, such as retrofit or utility requirements, can come up near closing. Confirm what documentation is needed early and who is responsible for it. If there is an HOA, allow time to receive and review the HOA documents and any approvals that may be required.
Market competitiveness
In competitive Pasadena and Los Angeles markets, sellers often favor shorter timelines and stronger financial signals like solid pre‑approval and proof of funds. Some buyers shorten inspection windows to 7 to 10 days, offer appraisal gap coverage, or increase earnest money to stand out. These strategies can help, but they also increase risk. Choose what fits your comfort level and finances.
Typical escrow timeline
Here is a practical overview of what to expect. Always follow the exact dates in your contract and coordinate with your lender and escrow.
- Day 0: Offer accepted and escrow opens. Your deposit is sent to escrow, and title work begins.
- Day 0 to 1: You receive seller disclosures and any available reports. Start ordering inspections right away.
- Days 1 to 3: Schedule the general home inspection. Order any specialized inspections based on the property.
- Days 0 to 10 or 17: Inspection period. Review disclosures, complete inspections, and submit repair requests or decide whether to remove or cancel under this contingency by the deadline.
- Days 1 to 14: Loan processing and appraisal. Submit all documents to your lender. The appraisal is ordered and typically returns within a week or two after ordering.
- By about Day 17 to 21: Address appraisal results and lender underwriting conditions. If value and loan approval are satisfactory, remove appraisal and loan contingencies in writing as required.
- Just before closing: Complete your final walkthrough to confirm the home’s condition and any agreed repairs or credits. Ensure all required contingency removals are on file.
- Closing: Your lender provides the Closing Disclosure at least three business days before close. Funds are disbursed, title transfers, and you receive keys.
How to negotiate with confidence
- Front‑load your timeline. Order inspections immediately so you can keep your inspection contingency as short as your comfort allows.
- Prioritize health and safety. Focus repair requests on major systems and safety issues. Consider seller credits if you prefer to manage repairs after closing.
- Coordinate with your lender early. Ask about appraisal scheduling, expected turn times, and what “loan approval” means for your specific file.
- Use targeted contingency language. If your loan program might change, ensure your contract allows flexibility within the contingency period.
- Keep options open. If the appraisal is low, be ready to renegotiate price, bring additional cash, or cancel within the contingency if needed.
When to call the pros
- Real estate agent: Drafts contingency terms that balance protection and competitiveness and keeps you on timeline.
- Lender: Confirms appraisal timing, loan conditions, and when it is safe to remove your loan contingency.
- Home inspector and specialists: Provide detailed findings so you can make repair requests or plan for future work.
- Escrow and title: Confirm municipal compliance steps and handle documentation for contingency removals and deposits.
- Real estate attorney: Consider for complex situations like significant unpermitted work or unique addenda.
Common mistakes to avoid
- Waiting to schedule inspections. Delays can force you to remove contingencies before you have full information.
- Removing the loan contingency too soon. Only do so when your lender confirms approval that meets contract terms.
- Ignoring permit history. Unpermitted work can affect insurance, refinancing, and future resale.
- Overlooking hillside or soil issues. If location or visible conditions suggest movement, consult specialists before removing protections.
- Waiving protections without a plan. If you shorten or waive a contingency, make sure your budget can handle surprise costs.
Final thoughts and next steps
Contingencies are there to protect you. In Pasadena and across Los Angeles, the right plan is to move fast, but not rush past key checkpoints. Use your inspection period wisely, stay in lockstep with your lender on appraisal and underwriting, and remove each contingency only when you are satisfied with the facts. With a clear strategy, you can stay competitive and safeguard your purchase.
If you want guidance tailored to your situation, reach out to Elizabeth Sanchez for a friendly, no‑pressure consultation. Our team serves first‑time buyers, growing families, and small investors across LA County, and we are happy to walk you through timelines, inspections, and negotiation options. Hablamos español.
FAQs
What is a contingency in a California home purchase?
- A contingency is a contract clause that gives you time to verify condition, value, and financing before you are fully committed, and it must be removed in writing by set deadlines.
How long is the inspection contingency in Pasadena?
- Local practice often ranges from 10 to 17 days, with shorter or longer periods negotiated based on market pressure and property complexity.
What happens if the appraisal is lower than the price?
- You can negotiate a price reduction, bring cash to cover the gap, request a reconsideration of value, or cancel under the appraisal contingency if you kept it.
When should I remove my loan contingency?
- Remove it when your lender confirms approval that satisfies contract terms, typically around 17 to 21 days, depending on your agreement and underwriting progress.
Do I need specialized inspections for older Pasadena homes?
- Often yes. Consider pest, sewer scope, roof, electrical, structural, or geotechnical inspections based on the home’s age, location, and any visible issues.
Can I make my offer stronger without waiving protections?
- Yes. You can shorten timelines you can meet, show strong pre‑approval and funds, offer flexible closing, or consider an appraisal gap amount that fits your budget.
