Real Estate Deposits Explained: What Every Buyer Should Know
Deposits are one of the most misunderstood parts of an Agreement of Purchase and Sale. Here’s what every buyer should know before making an offer.
What is a deposit?
When your offer on a home is accepted, with conditions or without, you need to put money down. That’s your deposit.
- It’s often around 5% of the purchase price, give or take, and it can vary
- It’s usually due within 24 hours of your offer being accepted
- It’s held in trust by the listing brokerage, so it’s safe
Good news: it goes toward your purchase
Many buyers don’t realize this: your deposit counts toward your down payment. It isn’t extra money on top. Depending on the size of your deposit, it could be a good chunk of what you need on closing.
When you get your deposit back
If your offer has conditions, such as financing or a home inspection, and you decide not to move forward during the conditional period, you get your deposit back. You’ll sign some paperwork, and the money is returned.
But it isn’t instant. It can take at least three business days, sometimes longer, depending on the brokerage and how the money is returned. If you’re planning to jump from one deal straight into another, that money may still be tied up in the first property.
When you could lose your deposit
Once your deal is firm, meaning there are no conditions or you’ve waived them, you’ve committed to buying the home. If you back out after that:
- You can lose your deposit, whether it’s $5,000 or $50,000
- You could also be sued for the seller’s losses
There’s no return receipt and no 10-day buffer on a home purchase. Treat going firm as a serious commitment.
Questions about deposits?
Veronica walks every buyer through the deposit process before they make an offer.
Call Veronica at 289-768-9968 or start your home search.
