When making an offer to purchase a property, the deposit is the money that is put down to secure it. The deposit is a gesture of good faith and demonstrates the buyer's commitment to the seller.
The deposit is usually placed in the trust account of the brokerage representing the seller. It is considered part of the purchase price and is adjusted as a credit to the buyer on closing.
There is no set amount for deposits. Some sellers may request a percentage of the purchase price, such as 5%. In a strong seller’s markets, where demand is greater than supply and many buyers are competing for the same home, a larger deposit makes the offer more appealing to the seller. The deposit amount can be negotiated between the buyer and seller, just like the purchase price and the closing date.
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