Non-Contingent Offers in Los Angeles: What You're Agreeing to and What's Actually at Risk

If you're shopping for a home in Los Angeles at any price above $2 million, there is a good chance your agent has already mentioned writing a clean offer. In competitive situations across Beverly Hills, the Hollywood Hills, Bel Air, and the Westside, sellers routinely receive multiple offers, and a buyer who needs every contingency in place is often not the buyer who wins.

But clean and non-contingent are not exactly the same thing, and the stakes are high enough that it is worth understanding precisely what you are agreeing to before you sign.

What the Standard California Purchase Agreement Actually Protects

The California Residential Purchase Agreement, the CAR contract used in nearly every residential transaction in LA, gives buyers three main contingencies:

The inspection contingency gives you the right to investigate the property and back out, or renegotiate, if what you find is unacceptable. The default window is 17 days from acceptance, though parties can agree to shorten it.

The appraisal contingency protects you if the property appraises below the purchase price. If the appraised value comes in at $3.8 million on a $4.2 million offer, the appraisal contingency lets you renegotiate or cancel without losing your deposit.

The loan contingency gives you an exit if your financing falls through. Even a buyer with a full pre-approval can lose loan approval if something changes between acceptance and closing, whether that is a job change, a rate spike, or new information the lender needs to evaluate.

Each of these contingencies is a contractual off-ramp. Waiving one or all of them means you lose that off-ramp.

How Much Deposit Is Actually at Risk

California's standard purchase agreement includes a liquidated damages clause, which both buyer and seller initial separately. If both parties sign it, and the buyer defaults after contingencies are gone, the seller keeps the deposit up to 3 percent of the purchase price. That is the cap under California law for residential transactions.

On a $3 million purchase, that is $90,000. On a $6 million home, it is $180,000. On a $10 million estate, $300,000.

If you have already removed your contingencies and something falls apart on your side, the seller does not have to accept the deposit and walk away. In theory they could sue for more. In practice, most sellers take the deposit and move on. But the 3 percent figure is real money, and anyone telling you the risk is trivial has not thought through the numbers.

Waiving the Inspection Contingency

This is the most common contingency buyers waive in a competitive LA market. The concern is obvious: if you can back out for any reason during the inspection period, the seller has a lot of uncertainty baked into the accepted offer.

Waiving the inspection contingency does not mean you cannot inspect. It means you cannot use the inspection results as a reason to cancel. Many buyers in this situation arrange a pre-inspection, sending their own inspector through the property before submitting the offer. That way you know what you are buying before you give up the right to object to it.

Pre-inspections work well on newer construction or properties with clear disclosure histories. They are harder to rely on with hillside homes, where foundation, drainage, and slope stability issues can take longer to fully evaluate, or with older Hollywood Hills or Los Feliz properties where the electrical panel, galvanized plumbing, and wood-frame condition may deserve more than a two-hour walkthrough.

If you are waiving the inspection contingency on a property where the seller disclosures show prior unpermitted work, active geological activity on the lot, or deferred maintenance across multiple systems, make sure you understand what you are looking past before you sign.

Waiving the Appraisal Contingency

In the upper price ranges in LA, waiving the appraisal contingency is extremely common. Luxury homes are difficult to appraise. A buyer pays $8.5 million for a property in Bel Air, and the appraiser finds three comparable sales, two of which closed 18 months ago and one of which is two miles away in a different neighborhood. The appraisal may come in well below the contract price through no fault of the seller or the market.

Buyers who waive the appraisal contingency are saying: we will pay the agreed price regardless of what the appraiser concludes. If you are financing part of the purchase, that means you agree to cover any gap between the appraised value and the contract price in cash.

On a $7 million home where the appraisal comes in at $6.5 million, and you are financing with 30 percent down, you would need to bring an additional $500,000 to the table to close. Make sure your liquidity can handle that before you agree to it.

Waiving the Loan Contingency

Waiving the loan contingency is the highest-risk move, and not one that most buyers in the LA market take lightly. It tells the seller that if your financing falls through for any reason, you will still close or lose your deposit.

The buyers who can reasonably waive the loan contingency in good faith are typically those with enough liquid assets to close without the mortgage if they have to, or those whose loan approval is essentially certain (large down payment, well-documented income, direct relationship with the lender, not a complex self-employment situation).

If you are waiving the loan contingency but you genuinely depend on the loan to close, you are taking on real risk. Job changes, lender overlays, rate-lock issues, changes to the property's condition report mid-escrow, all of these can affect financing at the last minute.

When a Non-Contingent Offer Makes Sense

Going non-contingent is the right call in some situations and a mistake in others.

It tends to make sense when the property is in good shape and you have already done enough due diligence to feel confident, when the price is well-supported by recent comparable sales in the neighborhood, when you have the financial reserves to cover a gap between the appraised value and the contract price, and when the seller has made clear they will not accept offers with full contingency timelines in a multiple-offer situation.

It also makes sense when the alternative is losing the property entirely. Winning a home you want at terms you can handle is better than writing a technically protected offer that finishes second.

When to Be More Careful

Non-contingent offers deserve more caution on hillside properties with complex geology, on homes in areas where fire insurance has become difficult to obtain, and on older properties with known or suspected deferred maintenance.

On a Hollywood Hills home in a Fire Hazard Severity Zone, for example, you should verify that you can actually get insurance before you remove the insurance contingency, not after. The CA FAIR Plan rate situation has made insurance availability a real transactional issue across parts of the LA market. Discovering that you cannot insure the property on reasonable terms after contingencies are gone is a serious problem.

Making a Non-Contingent Offer Without Selling First

One scenario that comes up often: you want to write a non-contingent offer on a new home in LA, but your equity is tied up in the home you currently own. A sale contingency is a non-starter in most competitive situations. A bridge loan can solve this. It pulls equity from your current home to fund the down payment and closing costs on the new one, so you can close clean.

We covered the details in the bridge loan post. Bridge financing adds cost, typically 9 to 11 percent annually on the bridge balance, but it lets you act as a non-contingent buyer without liquidating other assets.

FAQ

If I waive all contingencies, can anything protect me?

Your deposit is at risk, but it is capped at 3 percent of the purchase price under the liquidated damages clause (assuming both parties initialed it, which is standard). Some buyers also add a specific performance carve-out or negotiate reduced liquidated damages amounts in the counter-offer stage. Talk to your agent about what's reasonable for the specific property and seller situation.

Is a pre-inspection the same as waiving the inspection contingency?

No. A pre-inspection is due diligence you complete before submitting your offer. It gives you information so you can make an informed decision to waive. Waiving the contingency is a contractual choice you make in the offer itself. The two go together in a responsible non-contingent strategy.

What happens if I remove contingencies and then can't close?

If the seller has also signed the liquidated damages clause, they are entitled to keep your deposit up to 3 percent of the purchase price. They cannot automatically keep more than that without going to court, but they are also not required to accept the deposit and cancel cooperatively. The specific outcome depends on the seller, their agent, and sometimes a mediator or arbitrator.

How quickly does the inspection contingency normally expire in CA?

The default under the CAR purchase agreement is 17 days from the date of acceptance. In competitive situations, sellers frequently ask buyers to shorten this to 7 to 10 days, or to waive it entirely. Anything you agree to in the offer or during counter-offers governs, not the default.

If you are navigating a competitive offer situation in Los Angeles and want to talk through whether a non-contingent offer makes sense for the specific property and your financial position, reach out directly. Grey Square represents buyers across the Hollywood Hills, Beverly Hills, Bel Air, and the Westside, and we have negotiated non-contingent offers at every price point in this market.

Paul Blair is the founder and broker of Grey Square, a virtual real estate brokerage representing buyers and sellers across Dallas and Los Angeles. With 22 years in the business and more than $200 million in closed transactions, Paul works the full range of the market, from luxury homes in the Park Cities and Preston Hollow to estates in the Hollywood Hills and across the Westside. Connect with Paul and the Grey Square team at greysq.com. TX TREC #9011505 · CA DRE #01792671.