The Deposit
- Thread starter HomeBuyAU
- Start date
3 options:
1. Sits in the REAs trust account
2. Sits in the vendor's solicitor's trust account
3. Invested in the vendor's & the purchasers' joint names with the interest split 50/50
Last option is almost a waste of time with only 6 week's settlement periods and low interest being earned on deposits at call.
*edit* Actually 4 options. The 4th being, "released to the vendor but only for the purpose of being used as a deposit on another RE purchase"......so it moves from one REAs trust account to another. But this option still has some risk.
1. Sits in the REAs trust account
2. Sits in the vendor's solicitor's trust account
3. Invested in the vendor's & the purchasers' joint names with the interest split 50/50
Last option is almost a waste of time with only 6 week's settlement periods and low interest being earned on deposits at call.
*edit* Actually 4 options. The 4th being, "released to the vendor but only for the purpose of being used as a deposit on another RE purchase"......so it moves from one REAs trust account to another. But this option still has some risk.
Last edited:
OK thanks for the info.
Another thing I was interested in was to know if any of you have kept a deposit if a sale fell through? I have not read the documents about this for sometime now but from what I remember the seller is obliged to forfeit the deposit if for any reason they don't buy the property once the deposit has been made? Does the seller get this deposit in full to keep or do they have to share it with the agent? Does the agent have to be paid a fee in this case? What happens though if they decide to get inspections and they see some tiny thing they don't like and decide to pull out of the deal? I can see a lot of questions regarding deposits as I have only thought of these few things as I write.......
oh, one last thing, what is the general deposit amount ( %)?
edit: Propertunity, I was going to give you some kudos but apparently I have to spread the love around a bit more first
Another thing I was interested in was to know if any of you have kept a deposit if a sale fell through? I have not read the documents about this for sometime now but from what I remember the seller is obliged to forfeit the deposit if for any reason they don't buy the property once the deposit has been made? Does the seller get this deposit in full to keep or do they have to share it with the agent? Does the agent have to be paid a fee in this case? What happens though if they decide to get inspections and they see some tiny thing they don't like and decide to pull out of the deal? I can see a lot of questions regarding deposits as I have only thought of these few things as I write.......
oh, one last thing, what is the general deposit amount ( %)?edit: Propertunity, I was going to give you some kudos but apparently I have to spread the love around a bit more first
To answer your multi quezzies:
Yes, I have kept a deposit. The current NSW reia sales contract has a provision that the agent keeps their % if the sale falls through - fair enough, the agent has procured a sale but for reasons beyond their control it has fallen over outside of the cooling off period. If the buyer pulls out during the cooling off period, then they forfeit a small % of the deposit.
The deposit is as much or little as you agree.
Yes, I have kept a deposit. The current NSW reia sales contract has a provision that the agent keeps their % if the sale falls through - fair enough, the agent has procured a sale but for reasons beyond their control it has fallen over outside of the cooling off period. If the buyer pulls out during the cooling off period, then they forfeit a small % of the deposit.
The deposit is as much or little as you agree.
Thanks Scott, I only got a letter from the agent to say they are holding a deposit today but it doesn't say how much and I can't recall ever discussing the amount. I also can't find out really now since the holidays have started.
So when you say the agent is able to keep their % do you mean a % of the deposit or their % of the house sale as originally agreed? if it is a % of the deposit, how much would that be?
Sorry for all the questions, hope someone can answer them thanks!
With the cooling off period, how long is that? I would assume that starts from the time they made a verbal offer and it was accepted?
It all depends on the terms of your contracts with the agent and the purchaser. If nothing has been negotiated then the agent should be holding 10% deposit for you.
If the sale doesn't settle then the agent would usually be entitled to the full commission as if it had settled.
I guess it would be nice if it didn't settle and you get to keep the deposit
move on to the next buyer and hope it continues. Of course this would be very rare I'm sure but it's good to know where you stand, thanks!I guess it would be nice if it didn't settle and you get to keep the deposit
Well usually if the contract is unconditional and the purchaser doesn't settle, you as the vendor get to keep the 10% minus the agent's commission. Then you can resell the property to someone else, and if you get a lower price than the original sale, then you can sue the old purchaser for the difference.
I guess it would be nice if it didn't settle and you get to keep the deposit
Do it 10 times and you have the sale price and the property still!
I have heard, and have used a high deposit (well almost) as part of the bargaining deal, but an agent I was recently dealing with said `the deposit sits in the RE trust account so a higher deposit wouldn`t make a difference to the vendor` which is fair enough, and I agree, so unless some really special clauses/conditions, why does offering a higher deposit make any difference to the whole equation?????
I was under the impression, you only lose a certain small % (based on the contract price) of hte deposit if you pull out of the contract. Is this true? I mean it would be pretty unfair to put down a 50% deposit only to pull out to lose all of the 50%?
I was under the impression, you only lose a certain small % (based on the contract price) of hte deposit if you pull out of the contract. Is this true? I mean it would be pretty unfair to put down a 50% deposit only to pull out to lose all of the 50%?
A deposit often represents the commitment a buyer has to a property. I would far prefer a contract with a $50K deposit than one with $500 - in fact, I have never signed a contract with a deposit less than 5% of the sale price.
It is not so hard to walk away from $500, $50K shows a real intention to complete the sale which is what all vendors want.
Marg
marg4000,
It is quite an interesting point of difference between the real estate markets of over east and here in WA.
In the last 10 or so purchases of residential property, I have yet to pay more than a $1000 deposit. Most agents will not batter an eyelid at this amount, unlike over east, where I gather 10% in the norm.
Commercial is a different story though, with deposits usually being about the 10% mark. Naturally, this can be negotiated to whatever amount, depending on market conditions, strength of offer, horsepower of purchaser etc.
Boods
It is quite an interesting point of difference between the real estate markets of over east and here in WA.
In the last 10 or so purchases of residential property, I have yet to pay more than a $1000 deposit. Most agents will not batter an eyelid at this amount, unlike over east, where I gather 10% in the norm.
Commercial is a different story though, with deposits usually being about the 10% mark. Naturally, this can be negotiated to whatever amount, depending on market conditions, strength of offer, horsepower of purchaser etc.
Boods
that's interesting. That would be really putting salt into the wounds of the original buyer if I was to sue them as well, especially if it was over finance that they pulled out
It is possible though that one might get a lower price the next time since I have been learning here and from the agent that often the first offer is the best one.
that's interesting. That would be really putting salt into the wounds of the original buyer if I was to sue them as well, especially if it was over finance that they pulled out
If the purchaser had such an 'unstable' finance position that they couldn't complete, they would probably have included a "subject to finance" clause. The clause is their "get out of jail free" card; no forfeiture of deposit.
I have not been told anything by the solicitor or the agent about this. With the timing of it just before Christmas hasn't helped either but I would have liked to have had some say in weather I would accept this clause.
Have a read of the special conditions. These would be located after the standard contract part. You would have had some say because you were the one who accepted the contract and any special conditions in it.
I have not seen the contract yet, that is the thing I'm confused about. I only got a letter from the agent just before Christmas to say they are holding a deposit. I also had a brief phone conversation when they called me and I accepted the offer. I also heard from the solicitor (picked by the agent for me when i met them) and he confirmed that he would send me the contract.
So that is why I'm a little confused about the clause for the deposit as I have not seen the contract or the conditions the deposit is held and any clauses for the deposit.
Oh, in that case you don't really have a contract then, only an offer. Once you do get the contract you can then amend any terms (which would be a counter offer).
