What the deposit does
The deposit is part of the buyer's purchase funds, not an extra fee added to the price. It demonstrates commitment and becomes an important part of the contract once the offer is accepted.
In a typical transaction the brokerage receives the deposit and holds it in trust according to the contract and applicable rules. The offer should state the amount, the deadline and how it will be delivered. Never assume the deposit can simply be recovered if the buyer later changes their mind.
- Confirm that the money is liquid and can be delivered by the deadline
- Use the exact payment method and trust instructions provided by the brokerage
- Keep the deposit separate from the remaining down payment and closing-cost reserve
- Get legal advice immediately if a dispute or completion problem develops
How to choose an amount
Deposit expectations vary by price range, property type and negotiating conditions. In a competitive situation, a larger readily available deposit may make an offer appear stronger. In a slower market, the seller may still expect an amount that is meaningful relative to the purchase price.
The right amount is not automatically five per cent or any other fixed percentage. William compares the listing, recent local practice, the seller's instructions and the buyer's cash plan before recommending a term. The buyer's lender should also confirm how the deposit fits with proof-of-funds and down-payment requirements.
Protect the buyer before writing
A deposit does not replace financing, inspection, strata-document review or other due diligence. The contract must give the buyer the protections appropriate to the property and the buyer's circumstances.
Before an offer is submitted, confirm the source of funds, transfer limits, banking hours and the exact deposit deadline. If funds are coming from an investment account, another country or a gift, allow enough time for the lender and financial institution to document and move them.