Ep 11. How To Pay Your Deposit
This episode takes a look at how to pay your deposit, and the three most common options that are available for you such as EFT, Cheque, and the newer Macquarie Auction Deft Pay.
Here’s what you’ll learn from today’s episode:
Deposit payment options
Changing your transfer limit with your bank
Banker’s drafts
Using cheques
Speakers in today’s episode:
Michelle May - Michelle May Buyers Agents
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VIEW TRANSCRIPT
Hi and welcome to a new episode of the Buy Your Side Property Podcast, The Property Podcast to help you make better property buying decisions. It's Michelle here and today, let's talk about how to pay your deposit. There's a number of ways to pay that 5% or 10% percent, and I just wanted to make sure that you know all your options so that when you've found your dream property, you know exactly what to do. Here we go.
There are three main options: EFT, Cheque and Macquarie Auction Deft Pay. So let's talk about the three options and the pros and cons with all of them. So obviously at the moment we are in lockdown and auctions are happening virtually, and in-person exchanges are not happening so much anymore. So you need to understand that obviously, when it comes to making an offer and then exchanging at the point of exchange, you will be required to pay that 5% or 10% deposit, depending on what you have negotiated. So knowing the ways that you can pay is obviously important because you don't want to end up in a situation where you can't exchange and then end up being gazumped because you haven't organized your deposit and are ready to go.
Let's start with the basic options we've got EFT, which is obviously the Electronic Transfer, but what most people don't know until it's too late is that when it comes to your bank account, most banks put an automatic daily transfer limit in play. It could be somewhere around $1,000 or $5,000. But quite often it's never as much as the 5% or 10% you're requiring. And that is something that you can't just fix with a click of a button with most banks we have learned over the years, and it's really something that irks me because in some cases you actually have to go into a branch and talk to someone at the counter to lift that daily limit. It's not something they're willing to do it over the phone, and when they are willing to do over the phone, it may take a couple of days. So be aware that if you're going to auction on a Saturday, you may want to get that process started on the Monday before just to ensure that the bank has fixed that up for you in time. It's quite ridiculous how they get away with this, but that's something to be aware of. Your EFT, your daily transfer limit most likely won't cover that, and it can be quite stressful, so make sure you have that fixed up.
The second option and the very traditional way of doing real estate business and actually one of my preferred ways when we're not under restriction is to actually present your signed contract with a cheque on top. I find that a signed check with an enormous amount of money on it, along with a signed contract, can be a very good motivator for a vendor to sign on the dotted line when they're presented with it in person. It's not unusual for people to have cheque books anymore. I'm old enough to still have one and grown up with them, but most people don't have cheques linked to their bank account. But if you want to pay that way, that is certainly still a legal option, and many real estate agents actually still prefer cheques over any other ways to do it. But if you don't have a chequebook, you can actually go into a branch of your bank, if you have a branch still with your bank, and ask for blank personal cheques, they should be free of charge. The other option, if they don't offer personal cheques, is to do a banker's draft. So a bankers draft is slightly different to a cheque, because a cheque can still bounce if the amount is not in your bank account. But a banker's draft is a guaranteed cheque from the bank, so they check that the money's in there and they are a guarantor for that money. And therefore, of course, no surprise it costs money to get a banker's draft. I think it's usually about $25 and they ask you to nominate a number, so you have to obviously think about what you're going to be willing to spend on the day at the auction or your offer, and then nominate the 5% or 10% so that if there may be, a bit of a shortfall which you can then do an automatic transfer afterwards, if that's the case. But again, this is a bit of a labour intensive option, the cheque route, but still very, very much a good option to have in your back pocket.
Now, the third option is to pay with a relatively new option, which is Macquarie Auction Pay. So obviously it's been bankrolled by Macquarie Bank. And this is interesting because it actually requires very little involvement from you as the buyer. So this is a popular choice now at the moment with us doing online auctions and being in lockdown because all it requires is for the agent to input your BSB and your account number and then nominate the amount and then they'll send you an invite and then you can OK this for this money to be withdrawn, so it can also be done with a handheld device in person. There's a number of ways to do it, but the long and short of it is that they bypass the daily transfer limit that the bank imposes because the Macquarie Bank system has, I've been told, the same authority as the ATO, which is quite scary really. It's actually super handy as the real estate market is finally moving into the 21st century and going online and digital, which is great.
I think these are the most common ways to pay. I thought about this the other day and I was talking to an agent who told me that he did an auction a while ago and the winning person who had the highest bid forgot about the deposit and all he had was $50 in his wallet. So I don't want you to be that person, I want you to be prepared. The thing with all these things is that, it locks in the exchange, which means that as the buyer, you're locked in, but also the vendor is locked in, and that's the most important thing. You don't want to end up losing the property because you didn't manage to get your deposit across in time.
So I hope that helps you. Have you got any questions for me? I'd love to hear from you. Drop me a line at hello@buyyourside.com.au. Thanks for listening.