Deposits: Go big to get the home

By: Lindsay Smith

Deposits: Go big to get the home


real estate, buy sell love durham, oshawa real estate, durham region, market trends, buyer's market, seller's market, homes for sale near me, keller williams, real estate agent, agent experience, prediction, market evaluation, mortgage, down payment

If you were looking for advice about a medical issue, you would ask a doctor. With questions about taxes, you would go to an accountant and for issues with your car, you would no doubt ask a car mechanic. (Only after asking Ms. Google for her input.) Stick with me, I am going somewhere with this.

Ok, it is easy to establish that to get information on a subject you are not versed in you would approach a person who specializes in those areas. Next question: would you approach an accountant you knew worked in accounting on weekends, and has a full-time job detailing cars, with a tax-related question? Or would you ask a doctor a medical question knowing they retired 10 years ago, but still held their medical license?

The reason I am raising these questions was due to some responses I had to an article I wrote for The article was about how to “win in a bidding war”, and one of the topics I covered was how a large deposit submitted with the offer to purchase was a key component to securing the property.

The article prompted some robust online comments. One commenter mentioned she lost out on a home she was trying to buy due to her deposit being smaller than average, however, the one that prompted this blog post was from someone asking why a Seller would care about something that sits in a Brokerage trust account, and that there were other, more important factors.

Let’s dig into this idea about deposits being of little importance.

A few years ago, I was selling a property in Bowmanville and the Sellers, once sold, were planning on moving back home to Manitoba. We had a volley of offers on the property and they ended up taking one that was a little lower than the highest offer, however, it was submitted with a large deposit. The Sellers felt that if a Buyer was prepared to offer $50,000 as a deposit, they were going to close the deal. With the average home prices in Oshawa Whitby and Clarington in the $1,000,000 price point, the common deposit is in the $50,000 range. However, we are still seeing offers with $5,000 deposits. A quick 101 on what happens with a deposit might come in handy right now.

Once a property is sold, a deposit is required to be in possession of the Listing Brokerage within 24 hours of acceptance of the offer to purchase. The deposit, either by cheque or wire transfer, is deposited into the Brokerage trust account where it remains until closing. Prior to closing, one of the documents both the Buyer and Seller sign (which no one reads) is a release, mutually agreeing to release the deposit to the Seller. This becomes part of the payment the Seller receives from the Buyer.

A common myth is that when a property does not close, the Seller receives the deposit. This is not the case. There are only 2 ways to remove monies from a trust account. 1) By mutual agreement between Buyer and Seller. 2) By court order. When a Buyer does not complete the sale, several things can happen. The Buyer and Seller may agree to release the deposit, and in some cases, it would be directed to the Seller as compensation for the home sale not completing, or in the event of a lack of agreement, the Seller would be required to sue the Buyer for breach of contract. At some point, either a judge would make a decision, or the two parties would come to an agreement.

Deposits are a big deal and show good faith on behalf of the Buyer.

Back to the article I mentioned, and my questions about where to go looking for advice. The commenter who thought deposits were a non-issue, in the end, mentioned that they had a real estate license, but selling Real Estate was not their main business.

With 74,000 agents on the Toronto Real Estate Board, it is a challenge to wade through the volume of agents to find the ones who are full-time and invested in the business. Not only does a successful Realtor need to be versed in neighbourhoods, pricing and housing trends, but they also need to be skilled at drafting up an offer for a property whereby the Buyer and Seller are treated fairly and that the property will trade hands on the expected closing date. I have had 6 transactions that were firm and binding not close in the past 4 decades. It is rare for a property to sell and not close, but it does happen. I have the feeling when a Buyer, like Wendy Starr and I did when we bought our current home, submits $100,000 as a deposit, (as we did) the Seller can be assured that the home will close on time.

If you are planning on making a move, either to sell your current home or to purchase a property I am happy to show you how 4 decades of selling homes in Durham Region can help you make your move with confidence. I can be reached at or 905-743-5555

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