For first-time homebuyers, the idea of purchasing a home can be an exciting but also incredibly frightening thought. There is new terminology to learn, decisions to be made and large sums of money to be discussed. That’s why helping to keep clients calm throughout the home buying process is such an integral part of any agent’s job.
One way to help lessen a client’s fears is to explain what a deposit for purchase is and how they work. Understanding the ins and outs of a deposit and why it's important to sellers can quell some of the initial concerns that a buyer may have. Putting down a deposit can also allow buyers to feel that they are actually going ahead with the procedures of buying a home and that they are taking the first positive step towards homeownership.
Five Things to Share with Your Clients
1. Explain What the Money is Used for and What it Goes Towards
In most cases, first-time buyers have been saving up for a while, so knowing where every dollar is going will help them feel more comfortable. Explain that the deposit is typically attached to the purchase offer and that it is a good show of faith that they are serious about purchasing the home. A deposit can also show you and the sellers that the buyers are financially responsible and ready to be homeowners. In most cases, the deposit money is put into a trust account and the amount will be deducted from the total sale price of the home on the day of closing.
2. Make Sure They Know How Much They Will Have to Put Down
Advise your clients that a typical deposit is around 5% of the initial offer price. Although there is no fixed deposit amount as far as legality is concerned, the bigger the deposit, the more it showcases the seriousness of the offer – that the buyers are ready and capable to fund the deal. In some cases, your clients may need to take out a small, secondary loan in order to make a stronger offer. Companies like Second-Mortgage.ca may be a good resource for your buyers.
3. Let Them Know When the Deposit Needs to Be Made
Make certain that your clients know when the deposit must be made available, and that this information can be found in the purchase offer contract. In most cases, the cash must be made available within 24-hours of the offer being accepted. For this reason, it's important that your clients have considered the deposit prior to making an offer.
4. Ensure They’re Aware of What Will Happen if They Fail to Make the Deposit
Make sure your buyers understand what will happen if they choose not to buy the property after the deposit has been made.
5. Where to Secure the Funds for the Deposit
Homeowners who are looking to secure funds for the deposit of their next home can reach out to Second-Mortgage.ca to obtain a short-term deposit for purchase loan to put down on the purchase of their new home.
SAM KAMRA | FOUNDER
220 Duncan Mill Road, Toronto, ON M3B 3J5