Engle Realty: A Greater Baton Rouge Louisiana Real Estate Company
Specializing in both Residential & Commercial Real Estate Sales
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The Real Estate Deposit
What is a real estate deposit? Why have a deposit? What does a deposit do?
The deposit is a monetary commitment that you are making to buy the property. If you back out of the agreement for no reason other than changing your mind, then you will likely lose that deposit. The seller is at liberty to keep the deposit as consideration for the liquidated damages that the seller had incurred while the house was off the market. Deposits are usually not less than $500. Sometimes they are $1000. Sometimes several thousand dollars. The deposit amount is up to you, and the more you put the deposit as the more serious the seller will take your offer. Generally the bigger the price of the house, the higher the deposit. The deposit is generally made via personal check, which will then be cashed in a non-interest bearing checking account of the listing agents real estate office.
The purchase agreement spells out under what circumstances you can get the deposit back. Instances where you can get your deposit back:
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You inspect the property and cancel the contract do to an unsatisfactory inspection.
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You are unable to get financing for the property.
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The house does not appraise and the seller refuses to reduce the sales price.
TIP: The deposit will be held until closing. During closing you can add this amount to the total purchase amount of the property. So it isn't like you will never see the money again. At closing you can choose to either pocket it or to use it to go toward the closing amount.