All Topics / Help Needed! / limited deposit

Viewing 13 posts - 1 through 13 (of 13 total)
  • Profile photo of taleishataleisha
    Member
    @taleisha
    Join Date: 2002
    Post Count: 5

    I’m sure this has come up in the past – I want to purchase a property with full finance from the bank. I only want to put down $1,000 deposit but the R.E.Agent Advises I must pay 10%. I’ve heard of other people paying minimal deposits to hold a property – HOW IS THIS ACCOMPLISHED???

    Profile photo of richmondrichmond
    Participant
    @richmond
    Join Date: 2003
    Post Count: 831

    I don’t know what state you’re in, but when I was buying some in Qld, I put down about $100-$500 from memory to hold 4 houses worth over 300k. The 10% thing wasn’t an issue… cheers.

    r

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    The deposit is between you and the vendor. 10% is pretty common though.

    Either the agent hasn’t asked the vendor or the vendor wants 10%.

    In NSW if you default on settlement the vendor is entitled to keep the 10% deposit. If you haven’t paid it then he has to chase you for it. This is why my solicitor recommends taking the full 10% instead of any less.

    Hope this helps,

    Simon Macks
    Mortgage Broker
    [email protected]
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of melbearmelbear
    Member
    @melbear
    Join Date: 2003
    Post Count: 2,429

    taleisha, it’s as Mortgage Hunter says.

    My offer for the one I’m about to settle on in NSW included my terms of $1000 payable on exchange of contracts – balance payable at settlement.

    The agents generally just want to make sure they get paid – and the easiest way for them to do that is to have the 10% paid into their trust account.

    Just say you only have $1000 to put down, and that’s the condition of your offer.

    Cheers
    Mel

    Profile photo of ChrisandKezChrisandKez
    Participant
    @chrisandkez
    Join Date: 2004
    Post Count: 7

    Hello, we’re new to this site today,( not new to RE ) great to be here…
    The bank will want 10% because that’s the bank’s standard ask, although more , up to 20% for rural areas.
    Mind you, you should know from the sales contract why the seller is selling…if it happens they just need enough money for their move into a new home, make an offer to pay that much to them as deposit.

    It’s against the law for a realtor/agent to not present your offer anyway, best of luck to you.
    Kez

    If you think you can, you’re half way there ! Smile

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    Kez,

    These are two different deposit requirements. The banks is from 20% or less with LMI as a hedge against them needing to sell the property.

    The vendor requires a deposit with the offer (depending on the state) as a sign of good faith to show you are a serios buyer. Then a further deposit once the contracts are exchanged (here in NSW 10%) in case you pull out. This can be negotiated down.

    Cheers,

    Simon Macks
    Mortgage Broker
    [email protected]
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of markjrmarkjr
    Member
    @markjr
    Join Date: 2004
    Post Count: 3

    Taleisha,

    If you have to put down 10% then you may like to consider arranging a deposit bond.
    A Deposit Bond is used in lieu of cash for a deposit on the purchase of a property. The bond gives the Vendor security that can be converted to cash in the event the purchaser does not proceed with settlement of the property
    If your 10% deposit is tied up in the form of shares or equity that you do not want to use yet you can leave your deposit where it is and for a premium that is lower than current bank interest rate earnings you can purchase a Deposit Bond.
    (from http://www.deposit.com.au)

    Check
    http://www.deposit.com.au
    or
    http://www.shieldunderwriting.com

    and use the deposit bond calculators to work out what your premium would be.

    Regards,

    Mark

    Profile photo of Elysium-MElysium-M
    Member
    @elysium-m
    Join Date: 2003
    Post Count: 259

    Hi taleisha,

    In my view, it’s a try-on by the vendor’s agent. As Simon said, it’s in the vendor’s and the agent’s interests to get 10% deposit. That way, the agent knows he’s got his commission payment sitting in his trust account, which he can get his hands on immediately at settlement; and the vendor knows that he doesn’t have to chase you for the 10% if you default.

    However, there’s absolutely no law in any State or Territory of Australia which requires you to put down a minimum deposit of any sort.

    Theoretically, you could put in an offer with $1 deposit, and if the vendor accepts that offer, it’s a binding contract!

    In the end, it all comes down to negotiating something that’s fair and reasonable.

    In all my property deals, I’ve put down between $500 to $1,000 deposits, and the vendors have never had a problem with that – the haggling has always been over the purchase price.

    All the best, and let us know how it turns out.

    Cheers
    Elysium-M

    DIY Residential Property Settlements in WA – the book coming soon! When I can get my act together…

    Profile photo of JetDollarsJetDollars
    Participant
    @jetdollars
    Join Date: 2003
    Post Count: 2,435

    Hi taleisha,

    Sound like a good advice from all the guys. At the moment I am negotiate the no deposit down deal until settlement. The agent has to pass this information to the vendor. If the vendor accept it then I will pay everything at the settlement other I have to put down either $500 or 5% of purchase price.

    Hope that help, good luck with your investing journey.

    Warm Regards

    ChanDollars
    [Keep going, you’re on your way to financial freedom]

    Profile photo of Elysium-MElysium-M
    Member
    @elysium-m
    Join Date: 2003
    Post Count: 259

    Yep – Chan’s post reminded me of something that I always do – my offers will be on the basis that I only pay the deposit (whatever it ends up being) 7 days after I’m told that the vendor has accepted my offer. That way, I don’t have money tied up when there’s no binding contract, and have to wait for a few days to get the money back from the agent, and another 3 days for the cheque to clear in my bank account.

    Cheers
    Elysium-M

    DIY Residential Property Settlements in WA – the book coming soon! When I can get my act together…

    Profile photo of MelanieMelanie
    Member
    @melanie
    Join Date: 2003
    Post Count: 382

    Many RE Agents appear primarily concerned with covering their commission fees, which is around 3% of the purchase price, so I’ve found offering at least that much when the contract goes unconditional satisfies most agents. The RE Agent holds the deposit in a trust fund which the vendor can’t touch and takes out their commission portion on settlement before handing the rest over to the vendor, so generally the vendor doesn’t give a hoot about the deposit component but the RE Agents HATE chasing the vendors after settlement for their commission fees.

    Not as good as $1000 in most cases, but much better than 10%.

    Happy investing!

    [:)]
    Mel
    [email protected]

    Profile photo of Elysium-MElysium-M
    Member
    @elysium-m
    Join Date: 2003
    Post Count: 259

    Just remember that your deposit sitting in the agent’s trust account earns zero interest, unless you specifically request for it to be put into an interest bearing account (this should be specified in your offer). Not a big deal with small deposits, but something to think about when you’re putting down 3-10% of the purchase price.

    Cheers
    Elysium-M

    DIY Residential Property Settlements in WA – the book coming soon! When I can get my act together…

    Profile photo of ChrisandKezChrisandKez
    Participant
    @chrisandkez
    Join Date: 2004
    Post Count: 7

    Most useful advice and scenarios peeps :)
    keep it coming.
    If any of y’all brokers on the board can assist our clients with finance/down payment assistance, please let us know.
    We can do overseas financing ourselves , but only on amounts of $1M + investments.
    The residential area in aussie is where we need some serious contact,so if you think you could help our clients, we’d be happy to refer you some business.

    http://www.geocities.com/downsouth_re/Forum.html

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