What is a deposit and how much is typical?
Quick, blunt question that sells: “What is a deposit and how much is typical?” — Here’s the one-page answer every Georgetown home seller needs.
Quick Answer
A deposit is the buyer’s money held in trust when an offer is accepted. In Georgetown, ON, typical deposits range from 2% to 5% of the purchase price on resale homes. In hot markets or multiple-offer situations, sellers often push for 5% or more. For condos or lower-priced homes, 1%–3% is common. The deposit proves the buyer’s commitment and becomes part of the down payment at closing.
What a Deposit Actually Is (Plain Language)
- The deposit is not extra profit. It’s credited to the buyer’s down payment at closing.
- The buyer gives the deposit when the Agreement of Purchase and Sale (APS) is signed or within a short agreed window.
- A brokerage or lawyer holds the deposit in a trust account until closing or until the APS directs otherwise.
Understanding this is basic for sellers. The deposit is leverage in the offer. Ask for more when leverage is on your side.
Why Deposits Matter for Sellers in Georgetown, ON
- Commitment: Larger deposits reduce the chance a buyer walks away after conditions are cleared.
- Negotiation: A sizable deposit improves your negotiating position if the buyer later tries to back out.
- Signal of seriousness: In multiple-offer scenarios in Halton Hills, a bigger deposit shows the buyer is qualified and confident.
If you want clean, predictable closings, get the deposit right.
Typical Deposit Amounts — Georgetown Market Realities
- 5% of purchase price — Common for detached homes in competitive parts of Georgetown.
- 2%–3% — Common for balanced market conditions or mid-priced homes.
- 1%–2% — Often used for condos or lower-priced listings.
- Higher than 5% — Ask for this in ultra-competitive markets or if you need a stronger commitment.
Local tip: Sellers in Georgetown have been seeing more 3%–5% deposits when inventory is tight. If you list during peak buying months, aim higher.
How the Deposit Is Delivered and Held
- Certified cheque or bank draft to the seller’s listing brokerage is traditional.
- E-transfer to the brokerage trust account is increasingly accepted in Ontario — confirm with your listing brokerage.
- Brokerage holds the deposit in trust. It must be handled according to Ontario real estate trust rules.
Insist on certified funds or verified e-transfer. Unsure funds create closing risk.
When Is the Deposit Forfeited or Returned?
- Returned: If buyer’s conditions (financing, inspection) are not met and the buyer properly terminates within the agreed condition periods.
- Forfeited: If the buyer breaches the APS after conditions are met or waived, the seller may keep the deposit as liquidated damages — but courts can reduce deposits if they’re unreasonable.
Practical note: Deposit retention as sole remedy can be risky. Many sellers pursue specific performance or damages for larger breaches. Talk to your agent and lawyer before refusing to return funds.
Drafting the Offer: What Sellers Need to Insist On
- Clear deposit amount in dollars or percentage.
- Timeline: deposit delivered within 24–48 hours of acceptance.
- Form: certified cheque, bank draft, or confirmed e-transfer to brokerage trust.
- Conditions: timeline for waiver of conditions and what happens to the deposit when conditions are waived.
- Release clause: spells out when the deposit is payable to the seller or returned.
Add this language to the APS: “Deposit to be paid within 24 hours of acceptance by certified cheque, bank draft, or confirmed e-transfer to listing brokerage trust account. Deposit to be held in trust until closing or mutual release.”
Negotiation Tactics Sellers Can Use Around Deposits
- Ask for 5% in multiple-offer situations. It separates serious buyers from casual bidders.
- Make the deposit due immediately on acceptance or within 24 hours. Faster funds reduce default risk.
- Accept smaller deposits only with stronger conditional protections (e.g., firm financing proof, shorter condition periods).
- Use deposit size as trade leverage: higher deposit → more favourable closing date or fewer condition days.
- Ask for certified funds or bank drafts — avoid personal cheques.
These moves force buyers to prove commitment. Buyers who won’t increase their deposit probably aren’t strong candidates.
Examples With Numbers (Practical)
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Home listed at $800,000
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5% deposit = $40,000
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3% deposit = $24,000
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2% deposit = $16,000
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Condo listed at $450,000
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2% deposit = $9,000
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1% deposit = $4,500
Show these numbers to buyers in negotiation. Seeing cash values changes behaviour.
Local Considerations — Georgetown, Halton Hills, and the GTA
- Market speed: Georgetown sees seasonal peaks. During spring and early fall, buyers compete — deposits trend higher.
- Buyer profiles: Many buyers commute to Toronto. Qualified buyers often have pre-approval and can meet higher deposit demands.
- New builds vs resale: New builds may have smaller initial deposits but structured payment milestones. For resale homes, standard deposit norms apply.
Work with a local listing agent who understands Halton Hills pricing and typical deposit behaviour.
Common Deposit Pitfalls for Sellers (Avoid These)
- Accepting a low deposit from an unqualified buyer.
- Not specifying the deposit timeline or form in the APS.
- Assuming e-transfer is safe without verification — confirm with the brokerage.
- Treating deposit amounts as a fixed rule — adjust for buyer strength and market tempo.
Fix these and you reduce risk of failed closings and last-minute renegotiations.
What to Do When a Buyer Tries to Back Out
- Consult your agent immediately. They will review the APS and the condition status.
- Determine if conditions were properly waived. If not, deposit likely must be returned.
- If buyer breached after waiving conditions, you can usually keep the deposit as liquidated damages or pursue further legal remedy.
- Get legal advice before cashing a deposit or issuing refunds.
Handling this badly costs time and money.
Summary — Action Items for Sellers in Georgetown
- Aim for 3%–5% deposit on resale homes; 1%–3% on condos depending on market heat.
- Require certified funds or confirmed e-transfer to brokerage trust within 24–48 hours.
- Use deposit size as negotiation leverage in multiple-offer scenarios.
- Confirm deposit handling and release language in the APS.
If you want the best outcome, local negotiation beats generic advice every time.
Final Words from Your Local Listing Expert
I’m Tony Sousa, a Realtor serving Georgetown and Halton Hills. I negotiate offers and deposits every week. I’ll set the deposit strategy that gets you the highest secure offer and the cleanest closing.
Contact: tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
FAQ — Common Questions Georgetown Home Sellers Ask About Deposits, Offers & Negotiation
Q: What is the minimum deposit I should accept?
A: There’s no fixed minimum. For Georgetown resale houses, 2% is often acceptable. For competitive markets or higher-priced homes, demand 3%–5%.
Q: Does the deposit become part of the buyer’s down payment?
A: Yes. The deposit is credited against the buyer’s purchase funds at closing.
Q: Can the buyer pay the deposit by e-transfer?
A: Yes, many brokerages accept confirmed e-transfers in Ontario. Require confirmation and verify the funds into trust before relying on them.
Q: When is the deposit refundable?
A: If the buyer properly terminates under the APS conditions (financing, inspection) within the condition timelines, the deposit is refundable.
Q: When can a seller keep the deposit?
A: If the buyer breaches the APS after conditions are waived, the seller may be entitled to keep the deposit as liquidated damages, subject to legal review.
Q: Should I ask for a larger deposit in a bidding war?
A: Yes. Increasing the deposit filters out weak buyers and improves your position if the buyer later tries to back out.
Q: Can I require a bank draft or certified cheque only?
A: Yes. Stipulating certified funds is reasonable. Many sellers require it to reduce payment risk.
Q: How quickly must the deposit be delivered after acceptance?
A: Common practice: within 24–48 hours. Put that timeline in the APS.
Q: What if the buyer gives a small deposit but offers higher price?
A: Evaluate overall strength: price, financing proof, and condition periods. A higher price with weak deposit may still pose closing risk.
Q: Who holds the deposit in Georgetown?
A: The listing brokerage typically holds the deposit in their trust account until instructions in the APS or closing.
If you’re selling in Georgetown and want deposit and negotiation strategy customized to your home, I can help. Contact tony@sousasells.ca or call 416-477-2620.
