Brokers pushing for non-refundable deposits?

searcher profile

June 23, 2025

by a searcher from University of Virginia-Darden - Darden School of Business in Charlottesville, VA, USA

All, We've been getting some good traction on the LOIs, which is great. In both of our LOIs, the brokers have asked for a deposit. We've negotiated them to be refundable, but still it seems odd to me. One of the brokers pushed for a non-refundable deposit. (Hard no on that one.) We proposed a reciprocal breakup fee put in escrow so we don't get burned like we did in the last time where the seller decided to walk at the last minute. So two questions: 1) With the increase of folks in the ETA space, have you seen an uptick in brokers asking for deposits? 2) Have you had luck with a reciprocal agreement?
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commentor profile
Reply by a professional
from University of North Carolina at Wilmington in West Palm Beach, FL, USA
The deal fatigue in the ETA space is definitely causing some buyers to make unreasonable concessions and pay unsustainable multiples. Unfortunately, not much can be done about this broader market dynamic. As others have mentioned, I'd recommend leaving the non-refundable deposits and unrealistic multiples to others. Hold fast to your target parameters and don't lose sleep over deals lost due to inexperienced brokers. Remember, there aren't many requirements to become a broker, and I'm skeptical of any broker pushing unrealistic terms like non-refundable deposits. Your approach with the reciprocal breakup fee is smart - but ask the broker what are we really trying to solve for and let that be the guide to a deal structure that works or doesn't.
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Reply by an intermediary
from University of Chicago in Orlando, FL, USA
Really only if the broker primarily does real estate. Which can be more common in states that require a real estate license for business brokerage. So, you're right, it should be a hard no. But also understand that the broker might not realize that it's an out-of-market ask in these deals. Near zero chance on the reciprocal breakup fee except in some exceptional cases? If you had a great relationship w a seller, maybe you could get them to agree to reimburse for part of diligence costs if you allow them to terminate exclusivity early?
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