We are in the process of trying to buy an apartment in Melbourne. When we made our original offer, we said we would put down 1% of the deposit, and the real estate agent said we had to put down the balance of the deposit – 10% – within 2 weeks. Is this true? The vendor rejected our offer anyways, which we were prepared for, and plan on increasing our offer slightly within the next week – but I wanted to make sure when we do put this second offer in writing – do we have to put down 10% deposit before settlement? We are planning on a 30 day settlement.
Thanks for your help (again!!)
Cheers,
Jenhi jen,
i recently purchased an ip with only 5%. i may be mistaken but i don’t think there is any rule that a 10% deposit is required. as i said, with the property just purchased the re agent was also asking for 10%, however i said that i would give only 5% as funds were tied up elsewhere at the time. he accepted. i would certainly recommend that you bargain with the vendors re agent in future.
Hi Jen,
As Eric has indicated there is no requirement to pay a deposit of 10% – your agent is looking after his/her own interests.
Have a look at page 52 which clearly state a deposit of 10% is normal but it is negotiable.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958Jen
I agree with neo25x5 – you don’t necessarily have to put up 10% deposit.
Use the amount of the deposit as a negotiating tool – if you want a quick settlement then the seller is more than likely to accept a smaller deposit. The money is better in your pocket than sitting in an agent’s trust account.
The motivation for the agent is to get enough deposit to cover his/her commission but it is the seller’s decision not his/hers.
My son bought his second house today and the seller accepted a $500.00 deposit!
Do not listen to the agent and good luck.
Regards
Becksoma
“It’s about the Journey not the Destinationâ€
Is it possible that the 10% deposit is the real estate agents’ policy, or are they just trying to bluff us?
Also, they told me on our original offer, that in order to submit our offer in writing (rather than a verbal offer – i.e. BEFORE the offer was even submitted in writing) it was their policy that we must give them that 1% deposit check (which we agreed would be our original deposit)- generally do you have to give your intial deposit before the vendor accepts the offer – it seems like a waste of a check if the vendor rejects your offer – as happened with us.
By the way, this is all dealing with “MICM” in Melbourne if this helps.
Cheers,
JenHi Jen
Having the 10%deposit helps tie you to the deal as far as the agent is concerned and helps them prove to the vendor that they are doing their job.
The 10% is supposed to approximate the damages that would be awarded by the courts if you reneged on the contract.
That shouldn’t stop you offering less, like 5%.
Some forum dwellers stump up the 10% as a sign of good faith where others are of the view that the longer $$$ stay in your account the better, particularly on a long settlement.Steve
Originally posted by JenD:Is it possible that the 10% deposit is the real estate agents’ policy, or are they just trying to bluff us?
Office policy or not – the law says the size of the deposit is negotiable. Put down what you want.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958Thanks for all the answers!!
I have now fully read the http://www.consumer.vic.gov.au website (thanks Derick), so with that in mind, am I correct in saying:
1. The real estate agent must submit our offer in writing to the vendor, regardless of what (if any) initial deposit we decide to pay?
2. We can choose not to pay the “balance of the deposit (10%)” until settlement – and negotiate with the sellers on that if necessary?
Thanks so much for your help so far!
Cheers,
JenHi Jen
I never put down 10% deposit, the agents jump up and down but that is their bad luck. Just tell them that you buy lots of property and if you put down 10% all the time you wouldn’t have any money to live on.
It is only a problem in a rising market but in a market that is falling or going sideways most agents are happy to get a property sold.
If they say it is their office policy and you have to put 10% down, tell them it is your office policy not to. If you miss out on a property because of this it is no big deal, there are hundreds more out there.
Kerwyn.As a buyers agent it is in the best interest of my clients to have the deposit in their own accounts and not the coffers of the agent earning them interest.
My clients put down $500 for all queensland deals, tassie its either $1000 or $2000 and WA its $1000.
Anything more is BS and the agent guaranteeing their commision is already in their hot little hands as soon as possible. Balance on settlement.
Do not be duped into believing anything else as it is not required by law and you actually include it as the payment condition in most contracts.
DD
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!the real estate agents trust account (where deposits are held) do not earn interest.
as for how much you put down – its all negotiable and seeing as its your money, i’d reckon you have the upper hand.
cheers
brahms
Purveyor of Fine Finances
aka Mortgage Broker BrisbaneI always start negotiations from offering $0 – $500, but never pay more than $1,000.
My last IP I purchased with $1,000 deposit.
Last year I purchased IP with no deposit at all, but there was no RE agent involved.
Gamay
I’ve never mentioned the deposit on an offer. It’s the total price paid that matters, not the deposit.
When accepted I pay whatever seems appropriate or convenient at the time. I have paid a 10% deposit because I had the money just sitting around and it was only $8k so I didn’t mind.
On the other hand in WA I was asked (after offer was accepted) to put down 10% which would have been $18k. I just said I’ll put down $1k as I don’t have $18k floating about as free cash. The agent shrugged and said “ok, whatever” and took the cheque.
That’s, my experience.
JenD,
The real estate agent must submit our offer in writing to the vendor, regardless of what (if any) initial deposit we decide to payAs I understand it, a deal is made up of three parts – an offer, a deposit, and an acceptance.
If any of these is missing, I believe you might not have a valid binding contract.
The important part here is “the deposit” – and it can be $1 (but money must change hands). I have bought property with $20 down, remainder on settlement. This “might” vary from state to state, so do check this with your team.
An RE agent might well push for more – they are trying to ensure that you are a valid buyer, and finding out if you CAN AFFORD to buy is part of that negotiation. A decent deposit is one way they attempt to do this. Can’t blame them for trying
Benny
What if the contract specified a 10% deposit, is it still negotiable with the REA? How are we going to negotiate?
By the way, is it negotiable when buying a land from a REA who says this price is not negotiable?NewStart
I’ve crossed out the specified deposit and put $100 deposit (WA) without problem(a friend has put less- but he’s a hard osed negotiator), the contract is an agreement between two parties..and just like the Q regarding land price being negotiable..both parties have to reach mutual agreement for it to be accepted.
PS- see if any other REA have access to the land in question (if lots) if a single block, then he is just the sellers representative..
My quick 2c
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorIn NSW I beleive that you are required to put down a 10% deposit by law, otherwise the contract is not binding and the agent can sell the property to another party.
In Vic and WA it’s definitly negotiable.
Hi Peter,
Just had a quick read of the NSW Office of Fair Trading website and the tone of their document indicates that deposits are not ‘fixed’ in NSW either.
In particular these two lines;
Once you have made an offer on a property, you may be asked to pay an initial deposit. (at time of completing O and A)and
At the time of the exchange you will be required to pay a deposit, usually 10% of the purchase price. (At exchange of contract time)
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958For me and all of those I assist, its small deposit balance on settlement. Never actually 10% excpetion for me was my PPOR in Coffs.
NSW no 10% at cotract time, no deal. All other states it is different. 10% forget it.!!!!
DD
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!That was a long string of entries to get to the final conclusion, which is – The deposit on a property can be whatever you and the Vendor agree it should be (the Agent’s view is irrelevant!)
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