I’m buying a home and want to understand what is a real estate deposit and what do I need to know about it. Here are a few questions that I hear often.
1. When must a deposit be paid under the standard Ontario Real Estate Contract?
In Ontario, the standard contract gives buyers two choices: you can pay your deposit when you present your offer to the seller or you can agree to pay within 24 hours of the seller accepting your offer. Most buyers prefer the second option. If you are in a bidding war you are typic
2. How is a deposit different from a down payment?
A deposit is the funds that you agree to pay on signing an purchase agreement. It will be part of of your downpayment when you close on your house. Your down payment is the total amount that you put into your house on closing. The difference between the purchase price and your down payment is your mortgage (the amount that you agree to pay a lender for your home over time)
3. How much should my deposit be?
There is no set rule on how much the deposit needs to be. Some sellers identify their expectations when they list their home. Some real estate agents suggest 5% is a strong deposit. Sellers will view a higher deposit as a stronger offer. It may sway a seller to accept your offer over anothe offer with a lower deposit.
4. Under what circumstances would I lose my deposit?
If you decide not to close on your home after signing a binding contract, you will lose your deposit. (you also stand to lose far more than your deposit, so be careful)
5. What happens to my deposit when I close on my house
Your deposit will be included in money that you have paid towards the purchase house of you home. Your lawyer will take care of this.