The Deposit

The application deposit has been the center of many people's dissatisfaction with real estate brokers, but this is usually because they don't fully understand the purpose of the deposit.
When I take an application for one of my listings, I always take a $500 cash deposit. I always give a receipt, which explains that upon approval, the deposit will be credited toward the broker fee. If the application is rejected, the deposit will be refunded to the client. This deposit allows me to take the apartment off the market for 24-48 hours while the applicant gets the necessary paperwork assembled. The same principle applies to purchasing a property, but more money and more time are involved.

What sometimes frustrates clients and what sometimes makes them call us names is when they put down a deposit, submit an application, get approved by the landlord, and then change their minds about the apartment and expect their deposit to be refunded. 1) If the deposit were refundable at any time, it would be purposeless. One of its functions is to be sure the applicant is serious. 2) By the time the application is approved, the apartment has often been off the market for 3-7 days. That's lost time, and as we all know time=money for the landlord.

This may sound a bit harsh, but I think it makes sense. Lesson? Only apply for an apartment if you're sure you want it. Also, there are indeed some fishy brokers out there, so know that if your application is rejected, your deposit should be refunded to you in 99% of cases.