The Reserve Bank governor Michele Bullock has signalled the end of cheques approaching with COVID speeding up digital banking and hastening the decline of old fashioned paper payment methods. “The level of cheque usage has now fallen to such low levels that there is an active discussion about the future of the system.”
How can you pay a real estate deposit today?
Cheques are still valid, but our view is they will go in the next 12-24 months. When a personal cheque is written – typically, the full deposit funds are covered on the following Monday, the first working day of the week, or a date agreed in the sale contract. A bank-issued counter cheque is another way to pay a deposit – usually blank and filled in by the purchaser when the amount is known.
During COVID, handling of cheques (or any contact paperwork) was practically eliminated, and electronic transfers took over. Today, one large Melbourne real estate group uses an electronic transfer system for almost 95% of all deposit transactions. Generally, a purchaser will pre-arrange with the selling agent the electronic payment method before an auction or purchase.
What’s the legal position?
According to the REIV, the general rule is still a 10% deposit for purchasers. There are no laws that set the amount of deposit for a property sale – but the vendor and the purchaser must agree.
The buyer may pay the full deposit or a part deposit, with the remainder paid by a date specified in the sale contract. Cheques are still a good part of the real estate transaction process; however, electronic transfers are rising to the extent cheques will all but disappear – following paper contracts.
If you are paying electronically, discuss the payment with your bank pre-auction or pre-purchase – because you will often have a daily limit in place, which may be awkward.
We think the Reserve Bank’s view is spot-on as agency groups move towards electronic deposit methods.
At ela Property Advocates, we help you work through the deposit alternatives and help you make good property decisions. We source, assess and negotiate on your behalf. Call Guy Angwin 0412 022 998 or Geoff Briscoe 0419 740 351 Web: www.elapropertyadvocates.com