I always have buyers ask questions about deposits, so I recorded the video above to help explain. If you are a home buyer in Edmonton, or you want to know the steps to buying a home when it comes to deposits then you should watch it.
When you sit down with your realtor to write an offer on the home you would like to buy, one of the very important parts of the purchase contract covers deposits. The deposit shows the seller that you are serious about buying their home and gives them some assurance if you come to an agreement on the purchase price because they will essentially be taking the home off the market while it is pending and you are doing your due diligence to satisfy your conditions. Unfortunately the seller can not rely on your heart of gold or your million dollar smile….
The deposit is usually required within a few days after final acceptance of the offer and you want to make sure that it is held by the listing agents office or a real estate lawyer in trust. DO NOT LET A SELLER CASH YOUR DEPOSIT CHEQUE PERSONALLY OR YOU MIGHT CONSIDER THAT TO BE A CHARITABLE DONATION!!
How much do I need?
You should have at least $3000 to $5000 accessable and ready to put down if the purchase price is under $400,000 and if it is more than that then you should have $10,000 ready to put down.
If you are in a multiple offer situation then you want to structure your offer to look better than the offers you are competing with so put down as large a deposit as you can!
If the contract states that the deposit is supposed to be to the listing agents office within 2 days and you take it there 4 days later the seller has the right to cancel the deal! So make sure you are organized!
Can I get my money back?
Yes! If you do not get financing approval or if there are defects in the home that you are not comfortable with that were found in the home inspection and you sign a NON-WAIVER OF CONDITIONS then you will get your deposit back. Now if you remove your conditions and then change your mind about buying that home, the seller gets to keep that deposit to help them cover any costs or stress that they face.
Where does that money go?
Once the deal closes, your deposit will be applied towards the home’s total purchase price. Let’s just say you are buying a $400,000 home and are putting 10% down on your mortgage. Your total downpayment would be $40,000 and if you gave a $10,000 deposit then you would need to take $30,000 into the lawyers office when you go in to sign all your mortgage paperwork and title transfer request.
So there you go, I hope that explains the deposit when you are buying a home, if you have any questions or comments please let me know!