What Is a Deposit?
- A purchase deposit demonstrates the buyer’s good faith to the seller to close on their purchase. This deposit is held in trust & then credited back to the buyer at completion as part of their total down payment.
- For example, if your total down payment is $25,000 & your deposit is $10,000, you will only owe the difference of $15,000 at time of completion. Alternatively, if your down payment is $25,000 & you agree to a $30,000 deposit, you will be reimbursed the $5,000 at completion.
- Typically, the deposit is 5%, sometimes 10% of the purchase price.
- Is this deposit due right away? No, not until you agree to move forward with your sale. In other words, your deposit is due once you complete your due diligence period (also known as your subject removal period), meaning you’ve secured firm mortgage financing & completed your home inspection.