What is a Deposit?

When you enter into a Contract to buy a property in Queensland, you will probably be asked to put down a deposit. The deposit must be no more than 10% of the purchase price and may be as little as one dollar. However, the deposit is an indication to the Seller as to how serious you are about buying the property. It is therefore in your best interest to put down as much deposit as you can manage. Most Sellers will laugh at a deposit of $500 or $1,000, especially if you are looking to buy a home of substantial value.

How much deposit do I need?

The initial deposit may be one of good faith, say $500, or $1,000. This is usually made when you make your initial offer. At this stage, there is no guarantee the Seller will accept your offer anyway. Many Buyers opt to place a larger deposit once the contract is unconditional and any conditions such as Building & Pest Inspections or Finance are met.

Who holds the deposit?

The deposit is held by the Stakeholder. Usually this is the real estate agent who listed the property, however some times Solicitors will hold the deposit. It will be held in the Agent’s Trust Account until settlement. In the event the contract does not proceed due to a fault on the seller’s behalf, you may be entitled to a refund of the deposit. If your Building & Pest Inspection is adverse, or you are unable to obtain Finance, then you are automatically entitled to a refund. For answers to all your real estate questions, visit our Glossary of Real Estate Terms.