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  • Deposits

    Hi All,

    Today we made an offer on a property and we went back to the agents office to make a contract. We it came to the deposit entry she automatically put in $15000. My wife and I were pissed off that she did this without asking so I said we wouldn't be depositing anything until settlement date (2 months from now... provided we get it). She was very put out by this and said it was company policy etc and had to get approval by her boss.

    The contract was formally written out and there is to be no deposit. Normally we do put some $$$ down as a sign of 'goodwill' (and the agents get a some cash) but as I stated earlier we were pissed off.

    What do you guys and gals do in terms of paying a deposit and do you think we being a little too sensitive???

    Wada

  • #2
    Hi Wada

    Don't blame you for being p........ off.

    I generally put a deposit of anywhere from $50 to $500 depending on how much spare cash I've got.

    Put $5000 down once only because we had sold a property.

    Time to change your estate agent and get a more knowledgeable one.

    Regards
    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

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    • #3
      Hi,

      Don't blame you for being p........ off.
      oops I haven't posted for awhile and forgot about the non-use of profane language

      Wada

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      • #4
        yeah - it's certainly up for negotiation. RE Agents are keen to be paid but their job isn't done till settlement so I too give a wee deposit around $5000 for properties $200,000+

        Cheers,

        Donna :P
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        BusinessBlogs - the best business articles are found here

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        • #5
          Hey Wada,

          Are you buying up more of the good ones in Hawera?

          I normally put a deposit of $1000 down just for goodwill... There's no reason, legally or otherwise, to pay what the RE agent specifies.

          They're just trying it on... More money working for them in their trust account earning interest for 2-months while you settle.

          BTW what did you buy this time?

          Cheers, Nobleone
          Mistakes are just another tool for learning

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          • #6
            Hello
            Sorry but I do partally disagree. I have bought and sold quite a lot of property and whilst the agent is a fool for not asking you how to handle the deposit there really should be "something" put down and 10% is the theoretical number. Not that 10% is particularly important.

            I personally would not accept a contract with absolutely no money put down because the buyer has nothing to lose if they change their mind in 6 weeks time. And I have had this happen to me. I would want to know why there is no money being offered up and would take some persauding that this is good business for me to accept such a contract and that the buyer is acting in good faith.

            However (as an aside) something I do as a buyer - and this really annoys the agents - is that I pay the deposit to my solicitors Trust account. I do this because if the seller changes their mind then the agents take their fee out of the buyers deposit and leave the buyer/seller arguing about it in court. My view is that the seller contracted the agent and not me (the buyer) so if it goes to custard then they can sort it out without my money getting burnt in the process.

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            • #7
              Hi there,

              The last two properties we have purchased have been done so with no deposit. The Real Estate agent we work with has got used to this, and the sales have both gone through successfully.

              Cheers

              tpo

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              • #8
                We've purchased three with no deposit. One agent needed some convincing but another didn't bat an eyelid.

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                • #9
                  I owuld have thought the deposit was more of a goodwill gesture so I like Pixie's suggestion.

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                  • #10
                    I usually put $5000 down as good will. It keeps the agent happy and as long as settlement date isn't too far away, it's not really tying up much money.
                    You can find me at: Energise Web Design

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                    • #11
                      Hi,

                      I've had a day to think about this further and read some opinions on the forum. Clearly there is no right or wrong way for this and we feel comfortable with our choice. We've spoken to the agent and she has got over it. Normally we put down $1000 regardless of the property price, but have also bought IP's with nothing down until settlement.

                      NobleOne we bought in Dannevirke - 3 brm property to live in. This place is similar to Hawera where there is a shortage of good rental properties and a long waiting list of tenants. We would buy an IP in town but are planning to get into the lifestyle property market in the future.

                      Wada

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                      • #12
                        Just had to reply to this as I was offering on a house yesaterday and was told the same old 10% story. I explained that this was not legal and no I was not going to do it. The young agent explained to me that she had just done it -extended her morg to purchase another property. Her words were how would you feel if someone offered you a low deposit for your house? Well I stated that I wouldnt give a damn the figure and conditions are all that matter and after all it is only your commision that you are worried about. Any rate got what I wanted which was $5000 on the settlement date.

                        Just a waste of time and then I WAS TOLD THAT ONLY PROPERTY INVESTORS DO THAT!!!!

                        Just had to let you all know - happy new year and lets hope we have lots of great purchases and tenants and nice low deposits!!

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                        • #13
                          Hi Jan

                          Welcome to the forum.

                          I also have played the game of differing deposits. When I brought my first IP I paid 10%. $39000. Ouch. It really is a waste of money that we can use better. It normally takes about 6 weeks to settle and that is no chump change in interest lost.

                          I don't do that any more. I have done no deposit and minimal deposit amounts. Hey I like playing this game. Mostly the real estate guys humour me.

                          Legally speaking for a contract all that is needed is an offer (ie to sell the property) a counter offer ( to purchase the property) and valuable consideration (the deposit). It could be 5cents.

                          I bet the real estate guys would scream then.

                          Just as an aside... I just went unconditional on a property and the deposit cheque was delivered to my trusty solicitor. He then banked it and sent his trust cheque to the vendors solicitor. oops. The real estate guys didn't like that at all. They haven't spoken to me since.

                          Any way welcome to the forum. Muppet will welcome you soon I'm sure.
                          Counter cyclic means always swimming against the tide

                          Manawatu Property Investors' Association

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                          • #14
                            Is it a game here, to see who's first to welcome new members? Anyway, welcome to the forum, jan.

                            I used to give 10% as deposit, but now go for 5 to 7%.

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                            • #15
                              We have never given more than one thousand... we always tell the agents that our funds aren't that liquid and if they want the sale (which they do) they understand

                              It seems a good figure to me, shows you are serious but doesnt tie up too much cash!
                              New to property investing? See: Best PropertyTalk Threads for New and Old Investors And/Or:Propertytalk Wiki

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