April 21st, 2012 at 6:56 pm
Of course, the issue we see in this regard arises in the context of the negotiations that almost always occurs between buyer and seller. As you know, in the normal course, the buyer’s original offer will include the 3% deposit. However, it is also true that most times the seller will issue a counter offer, increasing the purchase price of the home. The question is whether the seller also increases the deposit at the same time to keep it at 3% of the newly offered price. As you know, the boilerplate language of the counter offer form does not address the deposit, saying only that the “down payment and loan amount(s) will be adjusted in the same proportion as in the original Offer.” As a result, if the deposit is going to be increased by a counter offer, it needs be explicitly done. The counter offer needs to say, “Purchase price to be x and deposit to be y,” with y equaling 3% of x.
What does all this mean for us? Well, as a listing agent, I believe it is your responsibility to discuss with the seller at the time of counter offer. Make sure to include an increased deposit amount in every counter, so that the seller has a 3% deposit in escrow. You could also include language as follows in the counter: “Deposit to equal 3% of the final purchase price.” Either way, should the buyer breach, your seller will be fully protected and, more importantly, will not be angry with you.
As always, please contact us with any questions you may have.
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