Just like any large purchase, buying a piece of real estate will typically require a deposit from the buyer’s side and that’s just to ensure that the buyer has some stake in the game in the Agreement of purchase and Sale. So how much should the deposit be and what is the significance of the deposit:
- Deposits for residential purchases are typically 5% or so however any amount that is agreed to will be considered a deposit which is held in the listing brokerage’s trust account. Deposits up to $100,000.00 are insured by the Real Estate Council of Ontario.
- Conditional agreements will typically allow for you to have your deposit to be returned in full without deduction should the deal fall through as a result of the condition not being fulfilled.
- Be sure to have your deposit readily available in an accessible account that can be produced in the form of a bank draft as most agreements will have a clause stipulated that the deposit must be submitted within 24 hours after acceptance or in some cases in a very hot sellers market even along with the offer.
So as soon as you submit your offer, you want to make sure your deposit is already ready in your account. The deposit is applied to the remainder of your downpayment as well if there is any mortgaged amount on closing. If you fail to close on the property for whatever reason, you risk losing your deposit.