House buying – reservation deposit

Hi

I have just had an offer accepted on a property and the estate agent has asked for a £999 refundable deposit for ‘reserve’ the property for me. Is this normal?

Sorry for my nativity – but I am a first time buyer!

Its a London property if that makes any difference….

Cheers

Eric

not “normal”, but not illegal.

You might want to check the terms of loss of deposit if you withdraw.

Or just say, “no thanks”, and ask for the vendors solicitor details to begin exchange of contracts. The agent is required to tell their client of any offers received, whether or not a “deposit” has been placed.

I doubt very much the deposit is the vendors idea.

not normal in my experience.
can understand why they would do it, but I wouldn’t pay it.

It shows commitment from the buyer and may reduce the risk of getting gazumped.

I would also ask for a £999.99p deposit from the seller, to ensure it stays available for you to purchase come completion time….

DrP

may reduce the risk of getting gazumped

unfortunately not.

There’s nothing to prevent the vendor handing the “deposit” back for any reason. TBH it’s more likely an agent’s thing to make sure they arent wasting time on a tyre kicker. Esp as it’s £999, not £1,000.

Following DrP, ideally what they should sell is an option to purchase for £1,000 at an agreed price. It would be a separate contract and if broken the remedy would probably be for the purchasers quantifiable losses.

cash is king. I expect this is also about cash flow at the estate agents. there’s a theme of protracted house sales in London at the moment. if they can get £1,000 on their accounts from the outset rather than waiting 6 months for the sale to complete they can make money on it.

There was an article on Watchdog recently where an estate agent was scamming people for deposits and then not refunding saying it for admin charges……beware!

Estate agent. Scam. In the same sentence?? – NEVER!! 😉

DrP

Talk to your solicitor – say you don’t want to do this.

i think my next words to the estate agent would be “poke it”

used to do the same to the leasing agents who asked for a reservation deposit while they do the checks.

if enough people grew a spine they would soon stop it !

there will be another house.

Was talking to a mate yesterday who lives in that there London. He said a friend of his who is house hunting was offered the ‘opportunity’ to join a special club at the estate agents. £1000 joining fee and they get introduced to the pwoperdee before it hits the market.

No idea if said friend of friend took them up on it but my first thoughts were:

1) **** estate agents can’t be trusted
2) Surely buyers or sellers wouldn’t go for that?
3) In my experience if an agent knows you mean business they’d do this anyway so it must be a scam.
4) **** estate agents can’t be trusted.

I’m assuming that the £1000 wasn’t a deposit as in the OP so can only assume that it’s going into the agents’ pockets. This made me think that **** estate agents can’t be trusted.

Tell them to do one. Legally they have to tell the client you’ve made an offer and tell you in writing when they have done so.

My mate had a kinda simular thing a few weeks ago – the agent was refusing to pass an offer on until my mate had shown the agent a copy of his bank account (with deposit) and a certificate of the maximum amount he could get a mortage on. He pointed the agent to the estate agents act, the estate agents code of practice and cc’d in his boss. Written confirmation the next day.

The agent has already passed on the offer though as it’s been accepted??

So this would basically be 1000GBP to ensure you don’t get gazumped?

Still unusual mind.

As an interesting comparison when you put an offer in on a house in Canada you put down a 10kdeposit but it is subject to a successful survey. More importantly the contract is then legally binding on both sides at that point so almost no gazumping.

I’d be careful as there’s no saying the EA won’t go bump overnight and you’ll end up £999 down! that said, i am surprised this isn’t done more as it would show more commitment from a buyer and would make me think they ere deadly serious buyers.

I would also ask for a £999.99p deposit from the seller

This. Its not the buyer you have to worry about but sellers not giving a **** about how much someone lays out in costs..

So this would basically be 1000GBP to ensure you don’t get gazumped?

Wouldnt prevent gazumping at all. The vendor can just hand back the deposit and take the higher price from the second purchaser. There’s no financial imperative to hold to the original offer.

I would also ask for a £999.99p deposit from the seller

Then all a second purchaser has to do is offer £999.99+£1 over the first purchaser’s offer price to gazump. Which in London is not a lot of money as a proportion of the house/flat price.

I still think the best way of getting security in a deal is to buy an option to purchase. Its not a conveyance, but a side contract, enforceable in it’s own right.