Purchase Deposit

[petercr]

The seller is not unreasonable asking for a reservation contract deposit, 10% is not standard , 3-5% is standard via most developments or home owners. This usualy secures the sale period of having the final contract drawn up or transfer via land office.

Once the seller recieves this payment he should take the home off the market . If for any reason you pull out of the sale , most cases you will lose the reservation deposit. In the reservation contract the owner usually stipulates a reasonable timescale for the finalised contract to be drawn , which in most cases is 4-6 weeks.

Escrow accounts are expensive and its down to the buyer in most circumstances to safeguard his depoit via a legal reservation contract which is agreed by both parties.

3% would be acceptable but in my case it was, to quote the vendor, 10% or the deal is off

I still question why many people consider that it is necesssary for the purchaser to be the only party making a financial committment under these arrangements. Perhaps this has more to do with agents loooking to secure their commission..............

[stgrhe]

3% would be acceptable but in my case it was, to quote the vendor, 10% or the deal is off

I still question why many people consider that it is necesssary for the purchaser to be the only party making a financial committment under these arrangements. Perhaps this has more to do with agents loooking to secure their commission..............

You are absolutely right to question sellers' requests for advance payments unless the buyer asks for an unreasonable long time. I said before, and say it again, one should not pay anything for nothing and once a purchase agreement has been signed and entered into force both parties are equally committed. Thus, for the buyer to part with money in advance is unbalanced and therefore unfair.

Yes, advance payments exists in many line of businesses and the main purpose then is for the seller to gain liquidity especially if there is a development involved of a new product. However, such advance payments are mostly secured by means of an escrow account or an advance payment guarantee issued by a bank. Further, the interests gained by the seller in these cases are offset against the price giving the buyer a slightly lower price.

I have done many large business deals, mostly international, before but never seen such an unrealistic approach before as I have seen here in Thailand in the real estate trade by sellers and developers, and in a buyer's market.

There are so many objects for sale now-a-days so with a bit of hard work it is not difficult to find good deals.

[trogers]

3% would be acceptable but in my case it was, to quote the vendor, 10% or the deal is off

I still question why many people consider that it is necesssary for the purchaser to be the only party making a financial committment under these arrangements. Perhaps this has more to do with agents loooking to secure their commission..............

You are absolutely right to question sellers' requests for advance payments unless the buyer asks for an unreasonable long time. I said before, and say it again, one should not pay anything for nothing and once a purchase agreement has been signed and entered into force both parties are equally committed. Thus, for the buyer to part with money in advance is unbalanced and therefore unfair.

Yes, advance payments exists in many line of businesses and the main purpose then is for the seller to gain liquidity especially if there is a development involved of a new product. However, such advance payments are mostly secured by means of an escrow account or an advance payment guarantee issued by a bank. Further, the interests gained by the seller in these cases are offset against the price giving the buyer a slightly lower price.

I have done many large business deals, mostly international, before but never seen such an unrealistic approach before as I have seen here in Thailand in the real estate trade by sellers and developers, and in a buyer's market.

There are so many objects for sale now-a-days so with a bit of hard work it is not difficult to find good deals.

Yes, you may have done large international deals. But have you bought or sold a real property personally?

Like I have said, the down payment is consideration furnished by the buyer for the sales and purchase agreement. Without this down payment, an action in court for breach of contract against the buyer (esp. if he is foreign) has no bite to secure payment for damages even if the court awards the case in favour of the seller. How can the seller collect, against what? Personal bankruptcy? Overseas assets?

[katabeachbum]

3% would be acceptable but in my case it was, to quote the vendor, 10% or the deal is off

I still question why many people consider that it is necesssary for the purchaser to be the only party making a financial committment under these arrangements. Perhaps this has more to do with agents loooking to secure their commission..............

You are absolutely right to question sellers' requests for advance payments unless the buyer asks for an unreasonable long time. I said before, and say it again, one should not pay anything for nothing and once a purchase agreement has been signed and entered into force both parties are equally committed. Thus, for the buyer to part with money in advance is unbalanced and therefore unfair.

Yes, advance payments exists in many line of businesses and the main purpose then is for the seller to gain liquidity especially if there is a development involved of a new product. However, such advance payments are mostly secured by means of an escrow account or an advance payment guarantee issued by a bank. Further, the interests gained by the seller in these cases are offset against the price giving the buyer a slightly lower price.

I have done many large business deals, mostly international, before but never seen such an unrealistic approach before as I have seen here in Thailand in the real estate trade by sellers and developers, and in a buyer's market.

There are so many objects for sale now-a-days so with a bit of hard work it is not difficult to find good deals.

Yes, you may have done large international deals. But have you bought or sold a real property personally?

Like I have said, the down payment is consideration furnished by the buyer for the sales and purchase agreement. Without this down payment, an action in court for breach of contract against the buyer (esp. if he is foreign) has no bite to secure payment for damages even if the court awards the case in favour of the seller. How can the seller collect, against what? Personal bankruptcy? Overseas assets?

agreed

as a seller I want a deposit to cover lost time off market or ensure completion of deal in time. Ideally buyer should be able to complete payment/transfer in a few days, but in real life most need more time, thus deposit is needed to sign agreement

[petercr]

3% would be acceptable but in my case it was, to quote the vendor, 10% or the deal is off

I still question why many people consider that it is necesssary for the purchaser to be the only party making a financial committment under these arrangements. Perhaps this has more to do with agents loooking to secure their commission..............

You are absolutely right to question sellers' requests for advance payments unless the buyer asks for an unreasonable long time. I said before, and say it again, one should not pay anything for nothing and once a purchase agreement has been signed and entered into force both parties are equally committed. Thus, for the buyer to part with money in advance is unbalanced and therefore unfair.

Yes, advance payments exists in many line of businesses and the main purpose then is for the seller to gain liquidity especially if there is a development involved of a new product. However, such advance payments are mostly secured by means of an escrow account or an advance payment guarantee issued by a bank. Further, the interests gained by the seller in these cases are offset against the price giving the buyer a slightly lower price.

I have done many large business deals, mostly international, before but never seen such an unrealistic approach before as I have seen here in Thailand in the real estate trade by sellers and developers, and in a buyer's market.

There are so many objects for sale now-a-days so with a bit of hard work it is not difficult to find good deals.

Yes, you may have done large international deals. But have you bought or sold a real property personally?

Like I have said, the down payment is consideration furnished by the buyer for the sales and purchase agreement. Without this down payment, an action in court for breach of contract against the buyer (esp. if he is foreign) has no bite to secure payment for damages even if the court awards the case in favour of the seller. How can the seller collect, against what? Personal bankruptcy? Overseas assets?

I fail to see the relationship between a purchase agreemnt and the % of deposit put down by the purchaser. Seems to me the only consideration is that a large deposit empowers the Agent/Vendor and leaves the purchaser no real protection against the vendor pulling out of the deal. IF there were a simple Escrow agent/arrangement available then both parties would be locked into the deal and both parties would be protected against default.

[trogers]

3% would be acceptable but in my case it was, to quote the vendor, 10% or the deal is off

I still question why many people consider that it is necesssary for the purchaser to be the only party making a financial committment under these arrangements. Perhaps this has more to do with agents loooking to secure their commission..............

You are absolutely right to question sellers' requests for advance payments unless the buyer asks for an unreasonable long time. I said before, and say it again, one should not pay anything for nothing and once a purchase agreement has been signed and entered into force both parties are equally committed. Thus, for the buyer to part with money in advance is unbalanced and therefore unfair.

Yes, advance payments exists in many line of businesses and the main purpose then is for the seller to gain liquidity especially if there is a development involved of a new product. However, such advance payments are mostly secured by means of an escrow account or an advance payment guarantee issued by a bank. Further, the interests gained by the seller in these cases are offset against the price giving the buyer a slightly lower price.

I have done many large business deals, mostly international, before but never seen such an unrealistic approach before as I have seen here in Thailand in the real estate trade by sellers and developers, and in a buyer's market.

There are so many objects for sale now-a-days so with a bit of hard work it is not difficult to find good deals.

Yes, you may have done large international deals. But have you bought or sold a real property personally?

Like I have said, the down payment is consideration furnished by the buyer for the sales and purchase agreement. Without this down payment, an action in court for breach of contract against the buyer (esp. if he is foreign) has no bite to secure payment for damages even if the court awards the case in favour of the seller. How can the seller collect, against what? Personal bankruptcy? Overseas assets?

I fail to see the relationship between a purchase agreemnt and the % of deposit put down by the purchaser. Seems to me the only consideration is that a large deposit empowers the Agent/Vendor and leaves the purchaser no real protection against the vendor pulling out of the deal. IF there were a simple Escrow agent/arrangement available then both parties would be locked into the deal and both parties would be protected against default.

That is where the property lawyer comes in. This deposit should be held by the seller's lawyer until the terms stated in the sales and purchase contract are either fulfilled or defaulted.

I have forfeited the 10% down payment of a buyer (for a property sales in Singapore) when she could not obtained bank financing for the deal, even after I have extended the period for a further 15 days.

[cheeryble]

A couple of months ago I had been looking at a piece of land and decided to go and talk turkey. My girlfriend mentioned the price which he had reduced to immediately I had asked how much. I had confirmed it by writing it in my phone and getting him to check.

Anyway as soon as she mentioned this as the price.....from which I hoped to go down a bit.....he denied it and went to a higher price, 5000 instead of 4000 per wah. When I got the phone out with all the numbers including the total price still written he looked very uncomfortable and when I persisted he walked out.

By two days later he was back in touch. I said forget it. Over the next month I showed disinterest without hardly responding and the price came back down to almost the original......oh, but you (thats me) can pay all the fees! Thanks I said but I have no intention of doing so.

As it turned out someone then jumped in and bought. Yesterday I learned the story. The seller owed money to the bank and could not in fact sell unless he got the extra money. He agreed a deal with these new people and just as it was happening gazumped on them.

So all along he had been a stinking ripoff merchant.

Whilst a civil contract is binding it has to be backed up by assets. In this case the assets may have been at best very difficult and at worst impossible to get at as they were certainly not available in the property in question.

So the question is.....are you feeling lucky?

[thaiwanderer]

A couple of months ago I had been looking at a piece of land and decided to go and talk turkey. My girlfriend mentioned the price which he had reduced to immediately I had asked how much. I had confirmed it by writing it in my phone and getting him to check.

Anyway as soon as she mentioned this as the price.....from which I hoped to go down a bit.....he denied it and went to a higher price, 5000 instead of 4000 per wah. When I got the phone out with all the numbers including the total price still written he looked very uncomfortable and when I persisted he walked out.

By two days later he was back in touch. I said forget it. Over the next month I showed disinterest without hardly responding and the price came back down to almost the original......oh, but you (thats me) can pay all the fees! Thanks I said but I have no intention of doing so.

As it turned out someone then jumped in and bought. Yesterday I learned the story. The seller owed money to the bank and could not in fact sell unless he got the extra money. He agreed a deal with these new people and just as it was happening gazumped on them.

So all along he had been a stinking ripoff merchant.

Whilst a civil contract is binding it has to be backed up by assets. In this case the assets may have been at best very difficult and at worst impossible to get at as they were certainly not available in the property in question.

So the question is.....are you feeling lucky?

They are due dilligence issues. Escrow provides deposit security.

[Darrel]

I'm amazed that any purchaser would consider paying any sort of deposit unless the vendor agrees to the same terms.

Why should a buyer suffer for pulling out, but a vendor be free to do it without penalty? Nuts to that.

When I sold my last house (in Europe) the 10% deposit was reciprocal. Had I not gone through with the sale at the agreed price it would have cost me 10%. And quite right too. The deposit money was, of course, held in escrow by a government agent. There is no way I would give even one Baht deposit directly to a vendor or real estate agent here. They are far too crooked to be trusted.

[trogers]

I'm amazed that any purchaser would consider paying any sort of deposit unless the vendor agrees to the same terms.

Why should a buyer suffer for pulling out, but a vendor be free to do it without penalty? Nuts to that.

When I sold my last house (in Europe) the 10% deposit was reciprocal. Had I not gone through with the sale at the agreed price it would have cost me 10%. And quite right too. The deposit money was, of course, held in escrow by a government agent. There is no way I would give even one Baht deposit directly to a vendor or real estate agent here. They are far too crooked to be trusted.

I do not know which European country you are from, but both vendor and purchaser are not free to pull out of a signed sales and purchase contract without consequences, unless due to impossibility or the contract is deemed illegal.

Eg for impossibility - a tsunami swept away the beach house and land before title is transfer.

Eg. for illegal - building does not comply with local codes and a demolition order has already been issued by authorities.

If the vendor pulls out due either to a change of heart. or that the price was too low, the purchaser can get the courts to force the sales and title transfer. If the vendor sold to a 3rd party for a higher price, the purchaser can claim the price difference as damages.

On the other hand, if a purchaser defaults on the deal, the vendor usually only forfeit the deposit. While 10% is the norm, deposit can be higher if circumstances require it to be so.

Note - sales has already been made at the point of signing the sales and purchase agreement. The point of title transfer is the point of completing the contract, and not the start.

[Darrel]

Yes, yes. Go to court in Thailand and spend the next 10 years waiting for a result. Wonderful. I have better things to do with my life, thanks.

A much simpler arrangement to ensure that both parties respect whatever terms they have agreed to is that both pay over an equivalent deposit to a totally independent and honest 3rd party. There is no reason whatsoever why a buyer should be expected to pay a deposit and a vendor not be expected to: as a group they are both just as likely (or unlikely) to default.

As I said, no one is getting a bean from me unless they put up an equivalent number of beans. And if a vendor doesnt like those entirely reasonable and equitable terms they can just look for another buyer (some hope!).

[Nawtier]

As I mentioned above somewhere....both parties need to be responsible for loss if they pull out of an already agreed deal and you really do not want to have to take someone to court for it here.......it will take a long long time.....Fact

[trogers]

Yes, yes. Go to court in Thailand and spend the next 10 years waiting for a result. Wonderful. I have better things to do with my life, thanks.

A much simpler arrangement to ensure that both parties respect whatever terms they have agreed to is that both pay over an equivalent deposit to a totally independent and honest 3rd party. There is no reason whatsoever why a buyer should be expected to pay a deposit and a vendor not be expected to: as a group they are both just as likely (or unlikely) to default.

As I said, no one is getting a bean from me unless they put up an equivalent number of beans. And if a vendor doesnt like those entirely reasonable and equitable terms they can just look for another buyer (some hope!).

And how many beans have you given away?

[Darrel]

And how many beans have you given away?

None, as I thought I made abundantly clear. Nor would I, unless a vendor made a similar commitment.

Either the deposit works two ways and is made to a totally independent 3rd party or there is no deposit.

[trogers]

And how many beans have you given away?

None, as I thought I made abundantly clear. Nor would I, unless a vendor made a similar commitment.

Either the deposit works two ways and is made to a totally independent 3rd party or there is no deposit.

Will you insist on the same when booking a new car?

[powderpuff]

Helps if you have the correct spelling:

ESCROW

dict

[Darrel]

Will you insist on the same when booking a new car?

It depends: if I was buying a car that was in stock (lke a house or condo is in stock) then I would pay no deposit at all; I would just hand over a cashier's cheque and drive it away. If for some reason they were waiting for stock then I would still not pay a deposit: I would just ask them to call me when they come in. If they couldnt manage that then I would just buy an identical car from another dealer that could manage it. If however I was ordering some very special one-off design, then yes I would expect to pay a small deposit. But in that case I would be buying from a main car dealer with the backing of a very large motor manufacturer, who would be unlikely to cancel my order on a whim and disappear with my money, and not from an unknown private property owner who is probably worth far less than I am and who for all I know doesnt even own the property he is trying to sell anyway.

Without some proper safeguards (like escrow) a vendor could easily promise to sell a condo or house to 30 different people at a low price, pocket 30 deposits of 10% and vanish on the first plane out, leaving the 30 buyers to argue about who gets what. Or even get many deposits and one full sale. And I wouldnt rely on the integrity of many Pattaya real estate agents to protect me from that. It's happened here with off-plan sales: why not with actual houses or condos?

And, to pose a more apt question, would you pay a deposit to someone selling you a used car here? If so, you must be absolutely nuts. That would be rather like paying a deposit to a Beach Road ladyboy.

[stgrhe]

When we bought our current house in Pran Buri we did not pay any deposit as the seller could not come up with a proper security (escrow or a bank advance payment guarantee). I made that clear to the seller if he wanted to sell to us, these were our terms and conditions or there would be no deal. I am amazed to read that so many TV members here defends unbalance deal putting burden on the buyer only. I would never ever agree to such terms, and have never done.

[trogers]

And, to pose a more apt question, would you pay a deposit to someone selling you a used car here? If so, you must be absolutely nuts. That would be rather like paying a deposit to a Beach Road ladyboy.

This would imply that you will be willing to exchange your beans for a property by the following day at the Land office?

The first thing I do before signing any sales and purchase agreement is to get a copy of the title deed and ID and get my lawyer to verify at the Land office the vendor is not a Beach Road lady boy.

[Darrel]

The first thing I do before signing any sales and purchase agreement is to get a copy of the title deed and ID and get my lawyer to verify at the Land office the vendor is not a Beach Road lady boy.

Far simpler just not to pay over any deposit. That way you have nothing to lose if the so-called vendor proves to be fake or otherwise unwilling to complete the deal.

I really fail to understand why anyone is defending the notion of unilateral deposits, which are of no benefit at all to buyers and only of help to vendors. Presumably all those defending them are themselves permanently selling and never buying, which puts them in that extraordinary group of owners of Thai property with several condos or houses for sale, few or no tenants and no cash. At the moment I seem to meet a new one like that every couple of days.

[trogers]

The first thing I do before signing any sales and purchase agreement is to get a copy of the title deed and ID and get my lawyer to verify at the Land office the vendor is not a Beach Road lady boy.

Far simpler just not to pay over any deposit. That way you have nothing to lose if the so-called vendor proves to be fake or otherwise unwilling to complete the deal.

I really fail to understand why anyone is defending the notion of unilateral deposits, which are of no benefit at all to buyers and only of help to vendors. Presumably all those defending them are themselves permanently selling and never buying, which puts them in that extraordinary group of owners of Thai property with several condos or houses for sale, few or no tenants and no cash. At the moment I seem to meet a new one like that every couple of days.

Then you should have bought at least one property since having met over a few dozen desperate sellers...with no cash, and should be desperate enough not to demand a deposit from you.

I sold one in Singapore and bought 5 in Bangkok.

[Darrel]

Few of them own property that I would consider worth buying. There is an incredibly large amount of overpriced rubbish on the property market in Pattaya. Badly built, badly located and badly maintained, if at all.

The sort of properties I would consider buying tend to be owned by people who gave some thought to the initial purchase, and bought the right thing in the right place, and didnt leave themselves in a position where they would have many properties, no apparent income and no savings. I'm in no hurry at all as I suspect that many asking prices will fall significantly in Pattaya at some point over the next couple of years as the global cuts begin to bite (this has barely started). I also suspect that the Baht will further decrease in value.

That said, some places now being sold by motivated sellers are actually near to a fair price, and as such I would buy one of them if I liked it enough to want to live in it.

[trogers]

Few of them own property that I would consider worth buying. There is an incredibly large amount of overpriced rubbish on the property market in Pattaya. Badly built, badly located and badly maintained, if at all.

The sort of properties I would consider buying tend to be owned by people who gave some thought to the initial purchase, and bought the right thing in the right place, and didnt leave themselves in a position where they would have many properties, no apparent income and no savings. I'm in no hurry at all as I suspect that many asking prices will fall significantly in Pattaya at some point over the next couple of years as the global cuts begin to bite (this has barely started). I also suspect that the Baht will further decrease in value.

That said, some places now being sold by motivated sellers are actually near to a fair price, and as such I would buy one of them if I liked it enough to want to live in it.

That is the point. Most desperate vendors (with units that are difficult to either rent out or sell off) are holding properties that are not investment grade. Looking for investment grade properties at fair or discounted prices is already a challenge. Turning down available offers from such owners on the point of deposit means not investing.