Deposit

How does the deposit work when buying a house?

I'm selling my house and as part of the sale I've agreed to pay the 5% deposit for the buyer. I would have thought that the deposit would have been based on the full asking price but the estate agent seems to think it would be based on 95% of the asking price as that's what the mortgage is for. But if you calculate the deposit on the 95% mortgage and add it to the amount the mortgage is for, it doesn't add up to the full asking price. I don't want to be short changed here, so can anyone confirm this?

Public Comments

1. sounds like you just gave a huge discount to the mortgagee
2. The buyer must arrange to pay for the home and all closing costs. If the buyer can only arrange a loan for 95% of the sale price, then he must somehow arrange the remaining 5%. The closing costs here in SC typically run around 3% of the sales price of the home.
3. Sounds bad to me. The deposit is paid by the buyer.This insures that if they change there minds the seller can recoup some costs. Your asking price is 5% lower with this deal.Just ask for 5% more for the house.The reale astate agent should have fully explained this to you. If they didn't find another agent. They were trying to pull one over on you!!!!
4. The whole point of a deposit is to show commitment from a buyer. If you are paying for it, it completely defeats the purpose of a deposit. I'm thinking that the money you are contributing is not a deposit, but put towards the closing costs, escrow and insurance involved with the loan. these are called seller contribution. You write this as though you physically cut a check, but I'm assuming that it will just come out of the sales proceeds? You can get this answered for you pretty quickly. go to a real estate attorney and provide the following: 1. Sales contract 2. Title work with preliminary HUD If you don't know of one, you can have someone like me take a look at it and see if this is normal. More importantly, your real estate agent isn't explaining things properly, or even worse has no idea what they are doing.
5. Depends on the type of loan the buyer has. If they are doing 100% finanicing, then you would be contributing 5%, making their loan of 100% financing void, so.. huh? They would then be financing 95%. Why are you willing to do that? Might as well just deduct 5% from the accepted purchase price instead of go through all that! I hope you didn't accept to pay some of their closing costs, too...along with Realtor commissions, my gosh. Better have a good Realtor representing you.