Real estate deposit
The BrokerFold Team — Product + Engineering
Last reviewed
A real estate deposit is the money a buyer pays shortly after an offer is accepted, as evidence of good faith and commitment to the agreement of purchase and sale. It is typically held in the listing brokerage’s trust account — not by the seller — until closing, when it is credited against the purchase price.
Timing, size, and mechanics
The agreement states when the deposit is due — commonly “herewith” (with the offer) or “upon acceptance,” meaning promptly within the timeframe the contract and provincial rules set. Amounts are market custom, not law: hotter markets and higher price points expect larger deposits (often several percent of the price), and a meaningful deposit strengthens an offer in competition. The funds sit in trust, protected from both parties, until the deal closes, collapses lawfully, or both sides sign a mutual release.
When it’s at risk
The deposit is the buyer’s skin in the game, and it works both ways. Back out of a firm deal without a legal basis and the deposit is generally forfeit — sometimes alongside further damages. Fail to satisfy a genuine condition in a conditional deal — financing, inspection — and the deposit normally comes back in full. Because a release usually needs both signatures, disputed deposits can sit in trust for a long time, which is its own incentive to write clean conditions.
Why it matters for your practice
Deposit questions — how much, how fast, can I lose it — are among the first a nervous buyer asks. Answering them honestly on your website marks you as the agent who explains the mechanics before the crunch, and it sets up the deposit-size conversation that offer strategy actually turns on.
Frequently asked questions
Is the deposit the same as the down payment?
No — the deposit is part of it. The deposit is paid within days of acceptance to show good faith; the down payment is the full equity portion you bring at closing. On closing day the deposit is credited toward the purchase price, so it effectively becomes the first slice of the down payment.
Can a buyer lose the deposit?
Yes. If a buyer walks away from a firm agreement without a legal basis, the deposit is generally at risk — and courts have ordered forfeiture even where the seller resold without a loss. Failing a genuine condition in a conditional offer is different: the deposit is normally returned. The distinction between conditional and firm is where deposits live or die.
Keep reading
- Real estate trust account A trust account holds other people's money — deposits, rents — separate from a brokerage's own funds, under strict provincial rules and audits.
- Agreement of purchase and sale The APS is the contract at the centre of every Ontario home sale — offer, acceptance, deposit, conditions and closing terms in one document.
- Conditional vs firm offer A conditional offer has escape hatches — financing, inspection, sale of home. A firm offer has none. What each means for risk, price, and strategy.