If you have ever put an offer in on purchasing a home, you know that a deposit upon acceptance of the offer is evident. The deposit is a minimum of $1000 but it can be more. The offer deposit is made out to anyone who is decided and agreed upon in the offer to hold it. Therefore, the offer deposit may be made out to a lawyer, homeowner, etc. Most of the time it is payable to the listing brokerage. It is then held until released to the seller’s lawyer. Once it is released it in turn goes towards the purchase price of the home.
The offer deposit is a showing of “good faith” and also shows motivation by the buyer. It does have to be minimum of $1000 but the bigger the better! If a buyer can pay more in the deposit it looks better to the seller. This helps especially if you are in a multiple offer situation. It can help your cause because by showing the cash, it shows you are serious about wanting to buy the property.
The deposit can be made by means of cheque, cash, or e-transfer. However, you cannot use credit card to pay for the deposit. If you are needing to use credit card to help purchase the biggest asset of your life, then you are not ready to buy it! In the end, it is all about how you can make your offer more enticing than the others on the table. The deposit is a great way in showing your commitment in wanting to purchase the home. If it can make the smallest difference with a seller edging towards your offer with a higher deposit than someone else’s, take advantage!
Learn more about what you need to do as a buyer. Read our 5 Factors For A Mortgage Pre-approval blog.