Setting the Deposit Amount
The payment of a deposit is an act of good faith by the purchaser that they intend to be bound by the contract. It is important to note that a contract for the purchase of property is a legally binding document. A purchaser's failure to honour the obligations under that contract will result in a breach of contract.
Generally, the deposit is 10% of the sale price, however this amount is negotiable and in the case of large property sales, is often less than 10%. Vendors have the right to set the deposit amount. Prospective purchasers should check the required deposit with the real estate salesperson before making an offer.
When this deposit is made to the real estate salesperson (on behalf of the vendor), it is then paid into the trust account of the real estate office handling the sale of the property. At settlement, the deposit becomes part of the purchase price.
For purchasers considering purchase at an auction, you must be aware that you are generally required to pay a deposit on the day of the auction if you are the successful bidder. Therefore it is important that you have discussed the required amount and method of payment with the salesperson handling the sale prior to the auction.
Alternatively, if you are entering into a private treaty contract, your deposit will be required at the completion of the ‘cooling off' period.
To assist consumers with real estate queries, REISA operates a free information service – REISA Query Connect on free call 1800 804 365, between the hours of 9.00am to 4.00pm each weekday. This service is staffed by knowledgeable real estate professionals with many years of practical experience.