Real Estate Agent trick 4 - Recommending a high deposit
After searching for a property, you will eventually come to a property that you
would like to consider purchasing. To do so, your buyer's agent needs to create
a contract. This contract often contains a security deposit to indicate the
interest of the purchase.
A security deposit informs the seller you are interested in purchasing the property and the amount lets the seller know how serious you are. The higher the amount, the more serious you are.
What is suppose to happen is that the moment this contract is agreed upon by both parties and signed, you must provide the security deposit within the set time specified in the contract. This security deposit is suppose to be returned to you if the contract becomes null and void, if the conditions (usually financing and inspection) specified in the contract fails.
Now, this procedure seems to be fair. Here is where the problem lies:
"If the contract becomes null and void and you want your money back, all parties must sign a form called a Mutual Release. This signature must include the buyer, buyer's agent, seller and seller's agent. If any one party does not sign, you will not get your money even if the contract has been null and void. If anyone party refuses to sign, you have to go through court, most likely small claims court, to settle your dispute and if you know anything about the court system in Canada, you know your court date could be as long as two years away!"
Your success in getting your security deposit back is COMPLETELY dependent on
your real estate agent's ethics.
Secondly,
when would you ever want to indicate to the seller that you are really
interested in buying their property? Unless if you are really, really stupid and
want to pay a lot for the property, you are pretty much telling the seller you
are eager and desparate which is not smart negotiating tactics.
As a general rule, don't put down anymore than $5000 REGARDLESS of the asking
price of the property.
Thirdly,
did you know it is not necessary to give the other agent the security deposit!
By giving the other agent the security deposit, it makes it even harder to get
back. If you have good relations with your real estate agent, you should be able
to leave the deposit in your agent's hands. This makes things easier. This
request is hard to pull through as it really depends on your relationship with
your agent.
A contract has no general rule that you need to follow. There are no limitation
to a contract. Your agent may attempt to exaggerate these rules to make the sale
easier. Becareful as this stage is critical to ensuring a safe and smooth
refund.
Nov. 25, 2011
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