Why do I need to give a deposit when buying a property?
A deposit forms part of the purchase of the property. The deposit ensures that the Buyer has a stake in the agreement and something to lose if they walk away and refuse to close the purchase.
How much should the deposit be?
The amount of the deposit varies and should be discussed with your real estate agent. In cottage country, 4% to 5% of the offered price is the norm.
Timing of the Deposit
If the deposit is due at a certain time but it is late does it matter? Yes, it matters. If the deposit is not received within the specified time frame, the buyer is technically in breach of the agreement. This could potentially allow the Seller to walk away from the deal. In a rising market the seller could see an opportunity to sell the house for more money. It is important to not be late with a deposit.
Who keeps the deposit?
The holder of the deposit is specified in the written agreement of purchase and sale. It is normally held in the listing brokerage’s trust account. Real estate trust accounts are regulated and audited on a regular basis.
When the deal closes, what happens to the deposit?
The deposit is credited to the Buyer’s closing and forms part of the purchase price.
If my offer is conditional on my being approved for financing, and I am not approved, do I get the deposit back?
If your offer was contingent on your obtaining financing which is stated in the offer as a condition and you are unable to obtain financing, your deposit is normally returned to you in full. The deposit is returned to the buyer with the agreement of both the buyer and seller. However, if your offer was not conditional on financing and you simply changed your mind, you may lose the deposit you provided, and you stand the chance of being sued by the Seller. This is a serious situation, and you will need to consult your lawyer.
Professional, honest and passionate about her chosen career of helping buyers and sellers achieve the best results in their real estate transactions. Jay calls Muskoka home and is delighted to help her clients settle here – whether in a waterfront cottage or a year-round luxury home. Jay owns the Richardson Team Real Estate office in the charming village of Dwight, Ontario, just 12 minutes east of Huntsville, on the doorstep of Algonquin Park and the shores of Lake of Bays. Jay is in demand as a Realtor of choice in cottage country and is respected by clients and colleagues alike for her positive, winning attitude and work ethic. Helping you navigate the often complex cottage and waterfront real estate transaction is what she does best. Doing what she loves in one of the world’s most beautiful settings!