WHEN buying a property, paying the deposit is an important part of the sale.
The payment signifies that the buyer intends to be bound by the contract of sale, which is a legally binding document. Failure to honour the obligations of the contract of sale will result in a breach of the c o n t r a c t , whi c h c a n h a v e serious consequences.
The amount for a house deposit can be negotiated but generally the deposit is 10 per cent of the sale price. The vendor has the right to set a specific deposit price but they should discuss this amount with their agent.
Similarly, potential buyers should ask about the deposit amount before making an offer so there is no misunderstanding on what is required.
The deposit must be paid as soon as the cooling-off period expires. When the deposit is made, it is paid into the trust account of the real estate agency handling the transaction. At settlement the deposit becomes part of the purchase price.
Buyers who buy at auction should be aware a deposit is required at the conclusion of the auction. They should make sure they have funds available on the day of auction.
When saving for a deposit, it is important you factor in all the fees and charges associated with buying property.
These charges include stamp duty, lender fees, legal fees and inspections costs.