If I tell you it’s going to rain, you can put the buckets on the porch.” If you grew up in the south, you made have heard this expression when a person is testifying to the veracity of his word. If you know a person and/or their reputation, you know whether you can trust their word or not.

However, with a stranger such as a buyer, the seller doesn’t know whether they’ll live up to the terms of the contract or not.

Buyers submit deposit money along with a contract to demonstrate their commitment to the terms of the offer.

The more deposit that the buyer gives indicates to the seller a higher level of commitment to the contract. Except for stated conditions in the sales contract, if the buyer fails to close on the sale, the deposit may be forfeited. Significant deposit makes the seller feels more secure that the contract will close.

There certainly are a lot of things that can dictate how much deposit is appropriate. Local customs, price of the home and type of mortgage can all help to determine the proper amount. In some areas, it may be common for it to be 1-5 percent of the purchase price. In other areas, it might be a specific amount like $1,000 to $10,000 depending on the sales price. It really comes down to whatever the buyer and seller agree is the proper amount.

Another strategy is to put up an adequate amount initially until you get through the inspections or contingency period and then, to put up an additional amount when the conditions have been removed.

The deposit demonstrates the buyers’ sincerity in making the offer and proceeding according to the agreement so the seller can take their home off the market and start making plans to move and give possession of their home. Ultimately, both parties want to close as anticipated according to the contract and the deposit helps facilitate that.

In the Calgary area the deposit is held in trust by the seller’s real estate firm. When all conditions are removed the funds will be transferred to the seller’s lawyer.  If the conditions are not removed, providing the buyer has proceeded in good faith, then the deposit will be returned to the buyer.

There are options if you home has a conditional sale on it. You can have your realtor report the sale as sale pending, this allows buyers to still view the home, and they know that they will have to wait for the first sale to fall, or they can write a back-up offer.   It will still show up on the internet as for sale.  It is a good option if you are anxious about the ability of the buyer to complete the sale.


A deposit is usually required on an offer to purchase.

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