Deposit: (Agreement for Sale & Purchase of Real Estate, Eighth Edition)
There are no hard and fast rules as to the amount that is offered as a deposit. The deposit is totally negotiable between the purchaser and vendor, with the industry standard being 10%, but many purchasers offer a fixed deposit amount. The standard Agreement is written such that if no other wording is added to the deposit amount, clause 2.1 of the Agreement states that the deposit is due upon acceptance of the offer. This deposit amount is part payment of the purchase price. Our advice differs depending on whether you are purchasing or selling a property:
Deposit advice for a Purchaser: Never pay the deposit directly to the Vendor. Pay the deposit to the Real Estate Agency or the vendors’ Solicitors Trust Account. House prices are a lot higher than they were 10 years ago, I think 5% is more than ample and if you think the vendor will accept less such as $10,000.00 or $5,000.00 put this in as the deposit, and whatever amount you enter always add the words “payable upon the unconditional date”. Why hand over your money before the Agreement is unconditional. Keep the funds in your account earning interest until you declare the Agreement unconditional. The Vendor will soon negotiate a higher deposit if it is not acceptable to them. Remember the lower the deposit accepted the better for you. The flip side of the coin is that the Vendor is looking for commitment to the Agreement, and an amount that reflects that.
Deposit advice for a Vendor: You want the deposit to be as high as possible and payable immediately upon the acceptance of the Agreement terms. This shows the commitment of the purchaser. Ideally you want 10%, and as a minimum enough to cover Real estate commission and legal fees should the purchaser fail to settle after confirming the Agreement unconditional. If you are relying on using your deposit for the purchase of another property, you need to consider how much will be released to you and when. Remember if a Real Estate agent is involved they will take their commission before releasing you the balance of deposit. Any balance will not be released to you until the Agreement is unconditional and the agent has held the deposit in trust for the required ten days.