Earnest Money and Due Diligence Fees in North Carolina: What’s the Difference?
Updated: Oct 1
When you make an offer on a home in North Carolina, you may hear about two payments: the due diligence fee and the earnest money deposit.
They’re both part of your offer, but they work differently. This is one of the first things I explain to buyers because I want you to understand what happens to your money if your plans change.
The Due Diligence Fee
The due diligence fee is paid to the seller. Under the standard North Carolina Offer to Purchase and Contract, it gives you the right to terminate the contract for any reason or no reason during the agreed-upon due diligence period.
That time is your opportunity to look into both the home and the purchase. You might:
Schedule a home inspection
Review HOA documents
Talk with your lender
Review repair or maintenance concerns
Research the property further
Decide whether you’re comfortable moving forward
The important part: The due diligence fee generally becomes the seller’s property once the contract is effective. The standard contract provides limited circumstances in which it may be refundable, so I want buyers to be comfortable with the amount they’re putting at risk before making an offer.
You can learn more about how due diligence works through NC REALTORS®.
The Earnest Money Deposit
Earnest money works differently.
Instead of being paid directly to the seller, the earnest money deposit is held by the escrow agent named in the contract. This may be a real estate firm or an attorney.
If you terminate the standard contract within your due diligence period, your earnest money is generally returned to you according to the terms of the contract.
If you continue past the due diligence deadline and later cannot close, your earnest money could be at risk depending on what happened and the terms of your contract.
That’s why we pay close attention to the due diligence deadline written into your offer.
If an inspection, loan question, appraisal issue, or another concern is still unresolved as that deadline approaches, we need to talk about your options while there’s still time to act.
What Happens to the Money If You Buy the Home?
Here’s the good news: both payments are credited to you at closing.
For example, say you paid:
$2,000 due diligence fee
+ $5,000 earnest money deposit
= $7,000 already credited toward your purchase at closing
That means it isn't an extra $7,000 added to the price of the home. The amounts you've already paid are accounted for as part of the transaction at closing.
If financing is one of the things you're trying to understand before making an offer, you may also want to read my guide to understanding your mortgage options.
How Much Should You Offer?
There isn’t one amount that fits every home or every buyer.
When we're putting together an offer, we'll look at things like the property, current competition, your timeline, the strength of the overall offer, and—most importantly—how much money you're comfortable putting at risk.
A seller may consider the amounts offered for due diligence and earnest money, but they're only part of the bigger picture. The entire offer matters.
If you're preparing to buy, you can browse more of my North Carolina home buying tips to learn more about the process before you start making offers.
Buying a Home in North Carolina?
If you’re thinking about buying a home in North Carolina, I’ll walk you through both amounts before you sign so you understand what you’re offering, what could be at risk, and the important deadlines in your contract.
Buying a home comes with a lot of unfamiliar terms. You shouldn't feel like you have to figure them all out on your own.
Jennifer Donahue, REALTOR®
Donahue Property Group | Keller Williams Legacy
919-522-9353
This article is for general informational purposes and is not legal advice. Contract terms and individual circumstances can vary. Buyers should review their specific contract and consult a North Carolina real estate attorney when legal advice is needed.
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