4. Price and deposit
Purchase price
An accurate estimate of the market value of a property is just as important for the purchase of an immovable as it is for the conclusion of a brokerage contract. Just like the seller, the buyer has expectations and makes his offer based on his own financial situation. These elements and his knowledge of the market give him an idea of what a property may be worth. Often, the value that the buyer gives to an immovable does not match the seller’s asking price. It can be lower or higher, depending on supply and demand in the sector, neighbourhood or type of property.
Once the buyer has determined the amount he wishes to offer to the seller, the broker must enter it in clause 4.1 of the promise to purchase. The broker must take care to enter the same amount in words and numbers.
Goods and Services Tax and Québec Sales Tax
It is possible that the property being sold is subject, in whole or in part, to the Goods and Services Tax (GST) and the Québec Sales Tax (QST). If so, the broker must inform the buyer. The buyer must understand the terms and conditions when drafting the promise to purchase, both when it comes to the amounts, which will influence the price offered, and in terms of who pays the taxes and how they are to be remitted.
For more information: Guideline – Verification, information and advice
Deposit
In a brokerage transaction, the buyer can pay a deposit, which must be placed in the agency’s trust account or the broker’s trust account if he acts on his own account. The amount of the deposit is at the discretion of the buyer. He can choose to give a significant amount or not to give a deposit at all. The deposit demonstrates the seriousness of the promise to purchase, and the seller will certainly see it as a sign of interest.
The various mandatory Promise to purchase forms for residential properties include clauses concerning the deposit to be paid on the purchase price.
For more information: Guideline – Keeping, using and conserving records, books, accounts and registers, From receiving the cheque to withdrawing the deposit: correctly reflecting reality and Trust account: refund of sums received as deposits or earnest money
