What is the Right Deposit Amount?
Apartment Specialists Podcast No: 126
Do you know how much money you should deposit when making an offer to buy an apartment? Watch this video to get some insights and to provide you with a clear guide about apartment buying.
How much should you put as a deposit when making an offer on an apartment?
This is a question I get every single time when I am writing up an offer on an apartment. The question is, there are actually no rules. I can give you a clear guide about putting in an offer when you want to make sure the owner or vendor thinks you are serious. What I mean by this is that when you are putting in your offer you want it to make the vendor wants to feel that you cannot walk away.
Upon the agreement going unconditional, you have to put a deposit down. If you put down $1,000.00, the vendor is going to think, "Well he is not that serious. He could walk away from the deal at any time, but why should I accept his offer?" Generally speaking, if it is a $500,000.00 property, you want to be putting at least $20,000 - $30,000.00 down. If It is a $1,000,000.00 property, then about $50,000.00 is fine. But the rule of thumb is a lot of people just say, "ten percent is probably the easiest way to go." So, if it is a $200,000.00 property, you are putting $20,000.00. If it is $500,000, you putting $50,000 and so on.
Do bear in mind is, you do not actually have to put in a deposit. It is more about how that is perceived by the vendor. Also, a lot of people are not aware as a real estate agent, it will often push for a commission. They will push for a deposit that will cover their commission. For example if they are selling a $500,000.00 property, they will need the deposit to cover the commission. If you put a $10,000.00 deposit, it is not going to cover their commission. You have got to be asking, "Okay, who is driving this? The agent or the vendor?"
Anyway hope that helps and yeah, talk soon.