As a Vancouver Realtor with over a decade of experience, I have had many questions from home sellers and buyers regarding deposits. Here are the most frequently asked questions and the answers to go along with them!
How much is the deposit supposed to be?
For buyers and sellers: The standard in the real estate industry is 5% of your purchase price. However, it is not set in stone. As a Vancouver Realtor for over 10 years I have seen higher deposit and I have seen smaller. Some owners will insist on 5% minimum however so in certain situations we will have to structure 5% over time. Say 2.5% on subject removal and another 2.5% within 60 days … or anything else for that matter. Not everyone has the 5% handy right away – especially if they have sold their home but it has not closed yet!
When is the deposit due?
For buyers and sellers: Typically, your deposit is due within 24 hours of removing all of your subjects (conditions) on the property you have an offer in. However, it can always be structured differently as well. Some Realtors make it due on the same day as your subject removal, some make it due within 24 hours. So really it depends on how the contract was written but the standard is within one day.
What if I do not have 5% available?
For buyers: For many people who have sold the bank will usually loan you the money as it will be a short-term loan until your home closes. Typically, a month or two. But for those who are buying for the first time, it may be trickier. We always recommend when buying that if the deposit amount is not readily available we talk to your bank or mortgage broker who can always assist. However, the bank of mom and dad is also a great option here….!
Can I use that deposit on my home for the place I buy?
For sellers: No! Plain and simple that money is not available to you at all. Unless for some reason the deposit given to you was a non-refundable deposit. But that very very rarely happens so do not count on it!
Where is the deposit held?
For buyers and sellers: The deposit is always held in the buying Real Estate Agents Brokerage Trust Account.
What type of cheque does the deposit have to be? Can it be a personal cheque?
Deposits should always be in a form of a Bank Draft. Many companies will not accept anything else (especially cash….). You can also do a money transfer/direct deposit as well of course.
These are the most frequently asked questions I have received over the last decade working in Vancouver Real Estate.
If you have questions about deposits or would like additional information, please contact me anytime!
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