We are going to an auction on Saturday and the agent and conveyancer have differing views on us using a deposit bond to buy the property. Is it ok to use a deposit bond at an auction?
There very first question is, will the vendor accept a deposit bond?
If the agent says the vendor will accept a deposit bond they can be a great way to have flexibility when bidding at an auction. The deposit bond can provide you with funds for the deposit up to a given value, which is helpful because at auction you never know until the day what the final value required will be.
I have a number of clients caught up in this disaster. Cost to each of them in thousands. ONE client has not been able to renegotiate another bond.
so if a deposit bond is the best way forward then rip in. But dont let anyone tell you they are risk-free. Deposit Power was by no means a tiddler in the deposit bond "pool".
so with all due respect to Albert, the first question maybe should be "how does one of these things work and what are the risks involved?"
this is the first thing I found online when I googled "deposit bond" and it is actually quite good:) It explains how a deposit bond is not a deposit and its not a bond.....its an insurance policy that guarantees the vendor gets paid on settlement.
and it costs the property purchaser a premium to fund this guarantee.
so when Deposit Power went belly-up a few months ago, lots of these guarantees evaporated. the property purchasers all had to run around like headless chooks lining up new deposit bonds, and one of them was not able to do so......so she had to pull cash out of a TD which was a pretty expensive excercise for her.....thousands.
so yeah, they are a convenience thing. And I am not a fan :)