In the excitement of searching for a new home, you can’t afford to overlook any of the details.
Many people don’t realize what kind of deposit they need to have to make an offer on a house, says REALTOR® Christine Lovatt. That’s why she has a discussion with her clients at the beginning of the process about the importance of having a deposit ready for the moment when they do want to make an offer. She makes sure to find out what amount they have available.
“A bigger deposit will put them in a better position with a Seller. It shows they are serious,” she says.
“It may surprise people to know that many Buyers, either first-time Buyers or even people who simply haven’t purchased a home in several years, do not know that they need a deposit!”
If you’re not prepared, you risk being disappointed. A deposit is usually due in 24 hours. Lovatt has had clients find out that they can’t get the funds right away; online banks, for example, take a few days and if you’re needing to withdraw money from an RRSP, that can take a day or two to process. “Have those funds ready to go before you make an offer!” she advises.
An amendment can be drawn up to change when the deposit is due, but the Seller has to agree to that. Lovatt has put in a clause that the deposit has to be given within three days of acceptance of an offer, but in this quick-moving market where multiple offers reign, that would not impress a Seller, who may choose to focus on another offer instead.
If there are indeed multiple offers on a home, an offer that is accompanied by a large deposit may be accepted—even if the offer amount itself is lower than the others—based on the perceived ability to close.
Someone is less likely to walk away from a large amount, versus, say, a $5,000 deposit. If an offer is accepted firm and the buyer doesn’t end up closing, the buyer will likely lose their deposit. Deposits are held in a trust account until the courts release it to either party.
If a Buyer decides to back out after a condition cannot be met—such as an inspection that the Buyer is unhappy with, or perhaps not qualifying for that particular property—the Seller signs a Mutual Release, and the deposit is returned.
“That is why conditions are so important: to protect the buyer and their deposit,” says the agent.
A great REALTOR® will ask you, even before you start looking at homes, what amount you have set aside for a deposit, as well as the amount you have been pre-approved for.
Says Lovatt, “This allows them to guide you in the best way possible. You don’t want to have any surprises when your offer is accepted!”
To book a free consultation, visit List With Lovatt, call 705-717-8726 or book direct.