When submitting an offer on a home, the buyer is expected to include a deposit check. Sometimes this is called the “good faith deposit” to show that they have sincere intentions for purchasing the home.
The deposit amount can vary considerably, and it’s usually based on the purchase price of the home. Just as a general guideline, you can expect to shell out about $1,000 for most homes under $250,000, and and anywhere from $2,000-5,000 for most higher-priced homes. Your EveryHome agent will help you to determine the proper amount, and the seller may also wish to negotiate a bit. While some folks prefer to use a cashier’s check, a simple bank check will usually work just fine at this point.
After the seller accepts the offer, this check will be deposited into the listing agency’s non-interest bearing escrow account. In most cases, there are two deposit checks: one when the offer is submitted, and one a couple of weeks later — usually just after the inspections are completed. Generally speaking, the second deposit check is a bit larger than the first, and tends to be a few thousand dollars.
Then, on settlement day, the sum of your two deposit checks will be deducted from the total amount that you owe. In other words, this deposit money isn’t an additional fee! You’ll be getting it all back in the form of a credit at the closing. The listing agency will communicate directly with the title/settlement agency, so you don’t have to worry about helping to transfer any of these funds. Your EveryHome agent and EveryHome’s conveyancer will also work with you to check all of the paperwork and ensure that the proper amount was subtracted.
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So what happens if the sale should become terminated? If buyer and seller cannot come to an agreement on one of the pre-determined contingencies, such as the home inspection or appraisal, then the buyer may walk away from the sale and keep their deposit money. However, if the buyer simply decides that they no longer wish to purchase the home, the seller has the right to keep the deposit money.