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Daffy2016

How much deposit to offer?

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Daffy2016

DH and I are looking at houses in SA. I understand the usual deposit to offer when making an offer is 10%, but we’re using a parental guarantee and don’t have that much cash to hand. Our broker has said to just offer $5,000 and that will be enough in SA.

Is that accurate? He has said there aren’t lending arrangements to cover a bigger deposit in SA. The most we could offer on a property is just over $500,000 and there’s no way we could lay hands on $50,000 cash for a deposit.

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rosie28

Technically (/legally) any amount can be a deposit, my dad once left a $50 note (8-9 years ago now), but as a vendor I would be very reluctant to accept less than 10%. To the extent that if I had two offers and one was $5000 deposit and one was a 10% deposit but was for a bit less I’d take the lower one. I’m not in SA, but I’m not quite sure why it would be overly different there, interested to hear from those in the know though. 

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Daffy2016

Thanks @rosie28, that’s what I was afraid of. What do people normally do to be able to pay the 10% if they don’t have cash readily available?

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SeaPrincess

We’re in WA and we’ve never put down 10%. I think we paid $10,000 on our current house.

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SeaPrincess
13 minutes ago, rosie28 said:

Technically (/legally) any amount can be a deposit, my dad once left a $50 note (8-9 years ago now), but as a vendor I would be very reluctant to accept less than 10%. To the extent that if I had two offers and one was $5000 deposit and one was a 10% deposit but was for a bit less I’d take the lower one. I’m not in SA, but I’m not quite sure why it would be overly different there, interested to hear from those in the know though. 

What difference does it make? The vendor doesn’t get the deposit - it goes into a trust fund making money for the agent. We had already sold our own house and could have come up 10% when we bought our house, but that’s not the normal process in WA. The agent suggested $10K as showing we were serious. He knew we’d been looking for months because we’d looked at multiple listings with him, all in a similar price range.

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BECZ

Pretty sure we paid $10000, which was just under 2%, but may be wrong as it was over 10 years ago.

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JRA
50 minutes ago, Daffy2016 said:

DH and I are looking at houses in SA. I understand the usual deposit to offer when making an offer is 10%, but we’re using a parental guarantee and don’t have that much cash to hand. Our broker has said to just offer $5,000 and that will be enough in SA.

Is that accurate? He has said there aren’t lending arrangements to cover a bigger deposit in SA. The most we could offer on a property is just over $500,000 and there’s no way we could lay hands on $50,000 cash for a deposit.

I am assuming this is not at auction?

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JRA
36 minutes ago, rosie28 said:

Technically (/legally) any amount can be a deposit, my dad once left a $50 note (8-9 years ago now), but as a vendor I would be very reluctant to accept less than 10%. To the extent that if I had two offers and one was $5000 deposit and one was a 10% deposit but was for a bit less I’d take the lower one. I’m not in SA, but I’m not quite sure why it would be overly different there, interested to hear from those in the know though. 

Is this after the contract was signed, or when making the offer?

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Daffy2016

@JRA not at auction, just your standard making a written offer to the agent.

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JRA
Just now, Daffy2016 said:

@JRA not at auction, just your standard making a written offer to the agent.

ok, so when signing the contract there will still be the proper deposit to pay?

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Daffy2016
3 minutes ago, JRA said:

ok, so when signing the contract there will still be the proper deposit to pay?

No, that’s the amount we’d pay when signing the contract and then the rest on settlement through the mortgage.

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rosie28

There are certainly circumstances where the contact is rescinded or the purchaser defaults and the vendor keeps all or part of the deposit. That’s very unlikely though, I’d be more likely to take a deposit as an indication of ability to complete the contract. Vendors will obviously differ. I’m fairly conservative/ careful in this regard.

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AdelTwins

$10k a few months ago here in SA for a property priced in that range.

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Mumma bug

Other factors might come into play e.g. Whether you’re offering on or over asking price,  settlement terms, how long it’s been on the market, and if they have more than one offer

 

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SeaPrincess

Here’s a link to SA info. https://www.sa.gov.au/topics/housing/buying-a-home/buying-property/home-buying-process

Summary:

Holding deposit $100 when making offer

Up to 10% on acceptance of contract

Cooling off period of 2 days, vendor can retain max $100 if the purchaser withdraws the offer during this period. (In WA, there is no cooling off period.)

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JRA
28 minutes ago, rosie28 said:

There are certainly circumstances where the contact is rescinded or the purchaser defaults and the vendor keeps all or part of the deposit. That’s very unlikely though, I’d be more likely to take a deposit as an indication of ability to complete the contract. Vendors will obviously differ. I’m fairly conservative/ careful in this regard.

Exactly, a buyer defaulting after signing the contract is a huge problem,. The 10% the seller keeps help that

3 minutes ago, Mumma bug said:

Other factors might come into play e.g. Whether you’re offering on or over asking price,  settlement terms, how long it’s been on the market, and if they have more than one offer

 

Exactly

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VVV

When we bought several years ago we paid $2k deposit (price range similar.) SA. 

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born.a.girl
1 hour ago, SeaPrincess said:

What difference does it make? The vendor doesn’t get the deposit - it goes into a trust fund making money for the agent. We had already sold our own house and could have come up 10% when we bought our house, but that’s not the normal process in WA. The agent suggested $10K as showing we were serious. He knew we’d been looking for months because we’d looked at multiple listings with him, all in a similar price range.

I don't know about REA trust funds, but Solicitor's trust funds don't, and can't make money for the solicitor.

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JRA
1 minute ago, born.a.girl said:

I don't know about REA trust funds, but Solicitor's trust funds don't, and can't make money for the solicitor.

Pretty sure it is the same for REA trust funds. 

It goes to a trust fund so they cant get their paws on it

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born.a.girl
Just now, JRA said:

Pretty sure it is the same for REA trust funds. 

It goes to a trust fund so they cant get their paws on it

Yes, I'd be 99.99% sure that's the case for all trust funds, but not 100%.  I know the interest on a solicitor's trust fund accounts is a significant contributor to Legal Aid funds.

 

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JRA
35 minutes ago, born.a.girl said:

Yes, I'd be 99.99% sure that's the case for all trust funds, but not 100%.  I know the interest on a solicitor's trust fund accounts is a significant contributor to Legal Aid funds.

 

I had no idea on that. WOW

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~Jolly_F~
2 hours ago, born.a.girl said:

I don't know about REA trust funds, but Solicitor's trust funds don't, and can't make money for the solicitor.

It’s the same. It’s a trust fund. It’s clients money, it can’t make money for the person holding it on trust.

Its a pain in the butt if the bank stuffs up and pays interest in a trust account, a trust account cannot have any unaccounted money!! 

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Ellie bean
3 hours ago, Daffy2016 said:

No, that’s the amount we’d pay when signing the contract and then the rest on settlement through the mortgage.

We have always paid a deposit of around $10K in WA. I’m not sure what’s standard in SA though.

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can'tstayaway

I have accepted less than 10% as a vendor.  I’ve also accepted a bank guarantee rather than cash (in Trust) as a deposit.  

As a buyer, I have offered the 10% and I have offered less than 10% too.  

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Hands Up

We paid 5% in Sydney last year. That was what we had to hand as we were buying first and then sold our old place. The vendors didn’t quibble on that point at all. We also insisted on 3 months settlement. It was a buyers market at that point though as it was just before the federal election and a lot of people were in the wait and see camp.

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