TORONTO – The mad scramble involved in putting down a deposit on a new home can be more than just a hassle – in some cases it can even be a deal breaker.
In an age where most purchases can be paid with a tap from a credit card or smartphone, the process of paying a deposit to secure a real estate deal is still tied to old-fashioned paper – bank drafts and cheques – and tight delivery deadlines.
But the process that often involves homeowners making multiple bank visits, skipping work and racing to the realtor’s office before closing time could soon be entering a new era. Starting in February, Royal LePage Atlantic will be one of several Halifax-area brokerages that will allow homebuyers to pay their deposits via mobile devices.
The new service is being offered by a startup called ExactDeposit. If the test run goes smoothly, it’s expected to be rolled out in brokerages across the country in the spring.
Halifax-based realtor Chris Ryan co-founded ExactDeposit with his friend Kevin Kline, who has worked in technology and telecommunications for more than two decades. The pair enlisted the help of computer science PhD candidates at Dalhousie University to develop a secure and mobile-friendly website that allows homebuyers to pay their deposits – around $5,000 on average – using their credit cards from a smartphone, tablet or computer.
No additional hardware is required. After the realtor prepares the transaction, the buyer simply logs in through a mobile browser and enters his or her credit card information and the money is deposited with the brokerage. The entire process takes roughly 10 minutes.
“You can do it in your pyjamas from anywhere in the world,” says Ryan.
Homebuyers with an accepted offer often find themselves a with 24 or 48-hour time limit to obtain a certified cheque and deliver it to the brokerage, or risk losing the deal. The challenge is compounded for those buying a home in another city or province.
Matthew Honsberger, a Halifax-based realtor with Royal LePage Atlantic, recalls an incident where a couple failed to get their deposit cheque in on time.
“They were just kind of dragging their feet a little, and when we actually did get it from them and give it to the other brokerage, the other brokerage said `No we terminated the agreement because we had a backup offer in place’ … Our folks lost out simply because they didn’t get a cheque there in time.”
For the decade that he’s been a real estate agent, Ryan says clients have been asking him for alternative ways to pay their deposits.
“There’s a huge momentum to pay for things with a credit card if at all possible,” he says.
Realtors will pay less than $10 a month for unlimited usage, while homebuyers will be charged 2.9 per cent of their transaction – a price that Kline admits may be too steep for some.
But recent homebuyer Christopher Beaton, a 27-year-old sales and service manager at TD Bank, says the rewards he earns on his credit card transactions would largely compensate for the fee.
Beaton says he would have “absolutely” used ExactDeposit if it was available when he was shopping for a house in Lower Sackville, N.S. last spring.
“We were living in Dartmouth and Sackville is about a 20-minute drive away,” says Beaton. “So it was a lot of driving around. Time is money.”