The short answer is yes, it is common but does not need to be done. Especially in the buyer’s market that we find ourselves in 2010.

Experience has shown that once the money goes into the real estate agent’s hands it is very difficult to retrieve. Even if a deposit contract is signed don’t expect it to be honored.

In one situation a signed purchase agreement was cancelled at the instigation of the seller and he acknowledged this in writing but the real estate agent still refused to refund the deposit. This situation is progressing towards the courts.

Usually the real estate agent wants the deposit before you have even seen the purchase contract or have anything in writing concerning the final price. Being committed with a substantial deposit plays into their hands because then you are more inclined to agree to changed or otherwise unacceptable terms to the purchase agreement.

What we recommend to our clients is that you first have everything in order and then when you find a property that you are interested in, proceed directly to the future purchase (if buying with a mortgage) or purchase agreement (if buying cash).

Nathan Brown www.czechpoint101.com