Hey {first_name},
 
When a home is sold, a deposit is paid by the Buyer to the Seller, and forms part of the final
purchase price.
 
Why do you need a deposit?
 
1. It provides security to the Seller
 
A deposit ensures that the Buyer has a stake in the agreement and something to
lose if they don’t close on the deal.
 
2. It’s a pre-estimate of damages
 
If the Buyer breaches the contract, the deposit acts as a signal to the courts of a
pre-estimated amount of damages.
 
How much should the deposit be?
 
Pro Tip:
 
Local customs typically indicate what is ‘normal.’ There is no fixed amount required by law, but the higher the deposit,
the more attractive the offer.
 
For example:
 
If you offer a deposit lower than expected, you risk looking like an unserious Buyer; your
offer is rejected. In a multiple offer scenario, a sizable deposit could give you an edge; I’ve
seen Sellers accept a lower price for a higher deposit.  
 
What happens to the deposit if you don’t fulfill a condition?
 
If your offer was conditional on ie. getting financing but your bank doesn’t approve you for
a mortgage, then you get your deposit back.
  • There is an expectation and obligation to act in good faith. You can’t just wake up the next day, change your mind, and use the financing clause to get out of the purchase.

  •  A deposit is returned only with the agreement of both the Buyer and the Seller. If the Seller doesn’t believe you acted in good faith in fulfilling a condition, they can refuse to release the deposit.
 
If your purchase was not conditional on financing (or you previously waived the condition
and now are unable to obtain financing), you forfeit the deposit and may be sued for
additional damages. This is not good.
 
To avoid any costly mistakes, make sure you talk to me. I’m always happy to help.
 
Sincerely,
 
{email_signature} 
 
Up next, I’ll tell you what you NEED to know about an offer’s financing condition,
and how it could save you from potentially a LOT of trouble.

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