Holding Deposits – There’s No Such Thing!

Posted on April 30, 2007 by | 7 Comments

Consumers Beware!This was our very first posting on the Australian Real Estate Blog, almost a year ago. We reproduce it for two reasons. First, the problem has become worse. Second, a recent experience suggests that the holding deposit is being used to penalise purchasers, and creates an opportunity for theft.

Holding Deposits – There’s No Such Thing! by Peter Mericka B.A., LL.B
A client recently engaged me to act for her in submitting her offer and negotiation her purchase of a home unit. I had been warned by the client that the estate agent was a bully, and that she would be difficult to deal with. I prepared the client’s offer and faxed it to the estate agent, requesting that it be put to the vendor as soon as possible (as required under the Estate Agent Regulations).

The estate agent telephoned me and explained, “We don’t put any offers to vendors unless we have a holding deposit of at least $500.”

I was forced to explain to the estate agent that her demand for a holding deposit in the circumstances was improper, unprofessional, and highly illegal.

The estate agent quickly backed down, and submitted my client’s offer without any further nonsense.

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  • Denise Newman says:

    1/8/15 – Regarding being forced to pay a holding deposit – I just put an offer on a $300K property today and was told by the Real Estate Agent (Chad Fowler – YPA Caroline Springs) that I had to pay $500.00 for a holding deposit, to show the vendor I was serious about my offer, which was interesting because when I asked to see the Section 32, I was told that the vendor had not yet got the paperwork in order! He said my offer would show the vendor I was serious and encourage them to complete the necessary documents for the sale of the property. A work colleague of mine recently purchased a property for $560K and was not forced to submit a holding deposit when he submitted his offer. How is this discrepancy allowed to occur?

    • Peter Mericka says:

      You cannot be forced to pay a “holding deposit”, as it is the contract that requires payment of a deposit, and until a contract has been signed by both parties it is not effective.

      • Angela says:

        Yesterday I was requested by LJHooker, Craigieburn, to give a $1000 with the contract of offer, which I did, being told that if I offered “X” amount, it the house would be mine. However, my offer was not presented to the vendor because in the meantime, the agent then called around to other persons who attended the open house, letting them know what my offer was and asking would they like to up it! Then the agent came back to me to asking me would I like to up the price again…a private auction was happening when it was a private sale. Not a happy customer and will not be dealing with LJ Hooker, Craigieburn in the future.

      • Miles says:


        Your blog is extremely informative, thankyou. Could you please do a quick article on how a prospective buyer should deal with a bullying agent just to negotiate a price? I have been trying to submit an offer on a block of land, and am being forced to sign a contract without the vendor’s signature, discouraged from reading the contract, and am being told to hand over $1000 as well. I’d simply like to negotiate a price before engaging legal representation. The buyer may have no interest in my price at all! I have no idea how or when I can direct them “shut up and take my offer to the vendor” and how I would police that they in fact did. Their approach with me at the moment, even though I presented a written offer, was to throw me out of their office for “not being serious” and refuse to take my offer to the vendor as it was not in the form of a signed contract. I’m no lawyer, but I don’t think handing over a signed contract and letting them keep it in their back pocket is a wise move.


        • Peter Mericka says:

          Real estate agents can be bullies, and it’s worth bypassing one that is acting like a speed hump. You are quite entitled to call on the vendor personally, tell the vendor that you are not keen on dealing with the real estate agent but you will if the vendor is interested in your price. The worst the vendor can do is to tell you that you must talk to the agent instead of with him, but most vendors will appreciate the feedback if the agent is making things difficult for potential purchasers.

          • Miles says:

            Thanks, that is great to know. I do have their details and will give them a call. Are they obliged to pass on non-contract offers without these $1000 deposits?

          • Peter Mericka says:

            They are obliged to pass on all offers, unless the vendor has instructed otherwise (which vendors rarely do). The $1,000 is just a psychological tool to force you to make something of a commitment, and it has no legal basis at all.

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