Attention all Buyers
What you need to know about real estate deposits, before you start shopping.
When does a deposit have to be paid in Ontario?
When you are shopping in Toronto in this market, you have to act fast, so when you find the right place that means having your agent preparing and putting an offer in on the place ASAP. At the same time you have to make sure that you have your funds in order for the deposit. The Standard real estate contract gives the buyer 2 choices: You can agree to pay it within 24 hrs after the seller accepts the offer, or in this market filled with multiple offers and bidding wars, you may want to submit your deposit with the offer to show good faith to the seller. (The same goes for a rental/lease offer)
What happens if the deposit is paid late?
I have gone through this with so many clients that either don’t have the funds readily available or are with a banking institution that is not open on weekends. The truth is that the seller has the right to cancel the deal. All time limits matter in a real estate contract and if you are late, even by a few minutes, the seller can try and cancel. And in this market on a good property there is another buyer waiting in line waiting nearby to show up and sweep in to take over.
How much should one pay as a deposit?
The normal deposit in Toronto is 5%.
(A lease requires first and last month)
Why does the deposit go to a brokerage?
The deposit goes to the seller’s brokerage which is the listing agent’s brokerage , and that is because if the seller takes off with the deposit, or goes bankrupt , the buyer is not protected. By the deposit being held by the brokerage , it is in trust and is protected by insurance so even if the brokerage goes bankrupt, the buyer can get their money back.
This is why it is so important to find the right person in the industry to make sure that you are protected and aware of all the details in a contract. I will discuss clauses and conditions very soon.