What is a deposit and how much should you expect to pay?
Here are two key points about deposits and how they impact the process of purchasing a home:
1. What Is A Deposit?
The deposit is essentially a sum of money that the buyer provides, as a sign of their commitment to proceed with the purchase. This deposit serves as reassurance to the seller of the buyer's intent. Typically, the amount of the deposit is around 5% of the homeβs total purchase price. Once the deposit is made, it is held securely in the listing agent's brokerage trust account. The deposit remains in this account until the closing of the sale, at which point it is applied toward the buyer's closing costs or down payment.
2. Deposit Recovery Conditions
In some cases, certain conditions may be met for the buyer to be able to recover their deposit without any penalties. For example, if the buyer includes a home inspection clause in the purchase agreement and the inspection reveals significant issues, they may have the option to back out of the deal and retrieve their deposit. Similarly, if the buyer's financing falls through and they arenβt able secure a mortgage, they may be entitled to a refund of their deposit. It is crucial for both buyers and sellers to thoroughly review the terms related to the deposit in the purchase agreement. Understanding these terms will help protect the interests of all parties involved and avoid any potential disputes.
Hope this guide was helpful! Please do not hesitate to contact me at 647.930.1888 or email info@timsold.com for all things real estate.
