In my years as a real estate professional in Steinbach and much of SouthEastern Manitoba, I’ve helped many people navigate the myriad of confusing things that come up while shopping for their next home.
One of the most common questions is, “What’s the difference between a deposit and a down payment?”
Allow me to help clear that up.
What is a Deposit (and Why should I Make One?)
A deposit is money that accompanies the Offer to Purchase. Basically, it’s trust money, the point of which is to show that you are serious about offering to buy the house, and can be trusted not to waste the seller’s time or somehow torpedo their efforts to sell their house to others. Your money says you will not change your mind and, if you do, you’re willing to compensate them for their wasted time.
What Happens to the Deposit If Your Offer is NOT Accepted?
Nothing. The cheque will not be cashed. It will be returned to you.
What Happens to the Deposit If Your Offer IS Accepted?
If your offer to purchase is accepted, the Cheque will be deposited into the listing broker’s trust account. Later, when the deal goes through and the purchase becomes official, the funds are forwarded to the lawyer’s office and distributed toward the purchase price according to standard practice.
TIP: Bigger deposits give you an advantage. The bigger your deposit, the more seriously the Seller will take you and your offer.
What happens if they deposit our check and then we can’t meet the conditions on the offer? (What if we don’t get financing? What if the home inspection fails? What if…?)
We will fill out a simple form requesting the deposit to be released and the funds will be returned to you.
What is a Down Payment?
The down payment is what your lender will require of you before approving your mortgage. This is between you and the lender and does not involve the real estate agent or seller.
For a traditional mortgage you will need 5% of the sale price for a down payment.
When arranging your down payment, if you can manage to put down 20% of the purchase price (or more), you will avoid the cost of paying an insurer like CMHC or Genworth.
If you do not have sufficient down payment available and you have a steady job, stable income, and a good credit rating, I can hook you up with a mobile specialist who has different products available and you may possibly be eligible to buy without a full down payment.
There are LOADS of other questions that crop up in real estate.
Good news – I have some awesome resources to set you up for a successful and pleasant buying experience.
Check out my HomeBuyer’s Information Package HERE
Being a rural real estate agent is a big, weird adventure.
Icy country roads are a regular threat.
Moccasins are part of my winter attire.
And then there was the time I nearly got shot.
My real estate agent career is riddled with stories. One in particular haunts me every now and then. I’d been on the hunt for properties for my client when I came across one I thought she’d be interested in. It was an old 1-1/2 storey, and it was vacant, in the process of being repossessed by the bank.
“Yes, you can see it,” they’d said, “but you’ll want to bring flashlights.” We’d been warned.
The first thing we noticed when we arrived at the property was the pile of broken drywall and lumber just beside the house. Before walking into the house, I asked, ‘You’ve got your flashlight?”
“Sure do.” She smiled and waved it.
“Okay,” I smiled too, “Let’s go!” I felt a wave of excitement as I turned the knob, but also a twinge of fear. I’d been to enough vacant, abandoned, and rental properties to know unpleasant surprises sometimes await us.
We entered to discover, thankfully, that most possessions had been cleared out. Even some of the light bulbs. That seemed overly thorough, I thought. I was glad the smell of mildew and cat litter was only faint.
Scanning the living room, it was clear someone had been renovating. Whether things were pulled apart or being put back together though, neither of us could tell. Across the room, one wall featured a smattering of painted images, from clowns to fairies. The painting skill was definitely there, but the sense of interior décor was definitely not.
“Why don’t we check out the basement?” I suggested, hoping to save the upstairs, which I assumed was the best of the floors, for last. She agreed, and we headed for the basement door.
I opened the old wooden door to the basement and, though I knew there was no hydro, was still surprised by the darkness of the stairwell. We clicked on our flashlights and headed down the old plank steps, guiding ourselves with a hand on the concrete wall.
Suddenly a cobweb strung across my face. I tried not to sound panicked as I clawed it away with both hands. Without a hand on the wall or pointing my light, I nearly lost my balance there in the dark.
As we descended, the musty litter smell intensified. In the darkness beside me, I heard her hold her breath. We stood at the bottom landing and pierced the darkness with our beams of light. Low ceiling. One large room. Concrete floors. Dingy.
“Yeah… I’m good.” She said, and hurried back upstairs.
Once back on the main floor, we headed to the stairway to check out the upper floor. They looked rickety. Dirty too. I was the REALTOR®, though, so went first. I gripped the wooden banister and it wriggled in my hand. I froze, looked back at my client, and said, ‘Careful…” and shook it again. How the poor banister had been worked into such a state, neither of us could imagine.
Despite it being mid-afternoon, daylight did little to brighten the house. With flashlights in hand, and feeling rather sleuth-like, we crept gingerly up the stairs. My heart pounded a bit faster as the carpeted steps snapped and popped beneath our weight. The banister continued to wobble. Instinctively, we each put a hand on the wall and moved a little faster.
The second floor was dark. Our small beams of light revealed the space to be vacant except for an overturned cardboard box, and a broken chair in one corner. The carpet throughout appeared to have had sand or gravel ground into it. I shuddered, glad to be wearing shoes. As the floor creaks echoed in the empty rooms, she moved to a bedroom window and inspected it.
“I don’t know…” she sighed and shook her head. “I wanted a fixer upper, but this place needs more than I really want to give it.” She shone her light at the floor and ground the carpet with the tip of her shoe. It made a crunching sound. “And what is that? Not only does the place need a lot of work, but it’s also pretty gross and creepy. I’m about done.”
“No problem. I’m glad to get out of here myself.” I shivered, remembering the cob web.
She cocked her head to the side, seeming to suddenly notice the closet door. “I love those old glass knobs.” We both shone a light on it as she approached. She cradled the knob gently in her palm before giving it a twist. She pulled the door open and shrieked. I jumped, startled.
“What is WITH this place?!”
I hurried over to see. There, in the beams of our lights, stood an old metal trunk. Atop the trunk sat a small plastic person, staring back at us, wide-eyed.
“Wow. Yeah, I’m about done too.” I said.
In moments, we had slapped the door closed, creaked and popped our way down the rickety stairs with our little flashlights, and exited into the rubble-filled yard.
Maybe we’d both seen too many scary movies. Maybe it was the ugliest doll in the creepiest place that got to us. I only know the place gave us both the willies. I wouldn’t trade it though. After all, what’s life without some adventure?