Is Deposit Rocket Legitimate? What Home Sellers Need to Know About Accepting an Offer with Deposit Rocket
Is Deposit Rocket Legitimate?
In the heat of offer night, a home seller receives an offer to purchase their home, and attached to one of the offers is a Deposit Rocket Deposit Bond in lieu of a certified cheque.
The first question of “what is this?” leads to Google with the second question of “Is Deposit Rocket legit?”, “Can Deposit Rocket replace deposit cheques?” etc.…
The short answer is; yes. Deposit Rocket is an invaluable tool for home buyers and sellers. In many cases, it is better than the old school method for cash deposit changing hands and being held in trust.
Deposit Bonds are new in Canada, with Deposit Rocket being the first to bring them here. They are very popular in Australia already and are now making their way to North America.
Is it legal?
It is 100% legal and vetted thoroughly by one of Canada’s top law firms.
Real Estate regulators do not formally approve any vendors. However, all real estate Councils have reviewed the program and have not voiced any objections.
What is a deposit bond?
A deposit bond is when an insurance company promises they’ll pay the amount in the event of default, where the seller is legally entitled to keep the deposit.
How does it work differently than a deposit cheque?
One of the main differences besides cash not changing hands until closing is that Deposit Rocket Bonds are instant. As soon as there’s an accepted agreement of purchase and sale, the bond takes effect.
Until Deposit Rocket, most accepted real estate offers, give the homebuyer up to 24 hours to deliver the cheque. Some buyers in those cases get cold feet the next day and refuse to provide the deposit.
Deposit Rocket, which issues the bonds insured by Northbridge General Insurance Corporation, are instant, so as soon as the accepted offer happens, you have the guaranteed deposit. If the buyer is deemed to be in default, the insurer pays the seller, and they deal with the purchaser to recover the funds.
There’s no chasing a buyer who has defaulted on delivering the deposit.
What’s the advantage for buyers using Deposit Rocket?
Many home buyers have their money tied up in investments or the equity of their current home. They are often having to deal with expensive home bridge loans or liquidating their assets.
Deposit Rocket allows them an affordable way to still buy the home of their dreams without using bridge loans or liquidating investments.
Who underwrites the bonds for Deposit Rocket?
Insured by Northbridge General Insurance Corporation rated “A” (excellent) by A.M. Best, “A-” (strong) by S&P, and “A” (good) by DBRS.
Deposit Rocket is a legitimate and advantageous tool for buyers, sellers, and Realtors to facilitate the buying and selling homes.
Since deposit bonds are relatively new to Canada, if you’re using one, we highly recommend giving the seller notice you’ll be submitting one ahead of time so they can do their due diligence before offer time.
If you want to learn more or ask questions about Deposit Rocket, you can book a call with someone on our team here.