What is a “Deposit” for?

When you make an offer on a property, you will be required to make a deposit towards the purchase price which indicates to the seller that you are negotiating in good faith, and signifies the intention of the buyer to complete the purchase. The deposit is normally kept in the Listing Broker’s trust account until the date of closing, or other termination of the Agreement such as lack of fulfillment of conditions, etc. At closing, the deposit becomes part of the down payment. If, for any reason, the buyer defaults on the contract, (a very rare occurrence, by the way) the deposit money becomes payment for damages suffered by sellers and their agents.

The deposit is typically a few thousand dollars, but usually less than five percent of the purchase price. If the seller does not accept the buyer’s contract, the money is returned to the buyer.

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