As Vancouver Realtor in addition to be a listing agent and represent many home sellers, I also work with surge of home buyers looking for a house or condo apartment for sale in Metro Vancouver.
I’ve had many of the buyers asking me when they need and required to submit their deposit payment when making an offer on a property for sale.
Contract of Purchase and Sale in other words, CPS, is the offer contract which a real estate buyer carefully prepares with their Vancouver Realtor. As I said many time s before, negotiation is not only the price of the property, but it is an entire shape and subjects of the contract.
Deposit to be one part of negotiation of its amount and the time of its payment.
Let’s talk about regular practice and expectation of the amount. In a real estate market where every house is sold and the inventory is limited, the expectation of the deposit is minimum of 5% of the offered price. In a multiple offer situation, the hire the deposit, the higher the interest of the buyers and consequently attracting the sellers.
In a market where there are many inventories and the home sales are not as active, sellers worry about the buyer’s remorse after their subject removal and before completion, so they ask for higher amount of deposit of 10%.
The amount of deposit must be agreeable to both buyers and sellers in the offer as part of negotiation.
Now let’s talk about the time of submission of deposit when the offer is accepted.
There are different practices. One to be submitting the deposit at the time of acceptance of the offer. So the amount agreed on the deposit to be paid immediately and as soon as the sellers of the property, accept the buyer’s offer.
This is regardless of whether the purchasers have subject and or conditional offer, they need to submit the deposit.
At a time where the buyer is not satisfied with the condition of the property based on agreed due diligence, they get their deposit returned by the sellers via signing a release form.
The other method is to submit the deposit after all conditions are satisfied by the buyer and on the date where they removed the subject and sign the subject removal form, they submit the agreed deposit amount to be held in trust. This is a most practice method as it has less amount of administration in a case where the deal falls through and buyer’s cannot remove subject in good faith.
Although even at this method, the buyer and seller must complete the release form.
As a cautious Vancouver Realtor, to be safe on a banking business days and making sure my real estate buyers are able to obtain a bank draft or money deposit from their financial institution, I request at least 1 business day after the byers have removed the subject for deposit to be paid. In this case if acceptance and or day of subject removal falls on a Saturday, which the banks are closed, the buyer can obtain the deposit for the home for sale they made the offer on, one business day after all subject are removed.
Have more question about deposit and trust? Contact me and I’d be happy to help.