Buyers moving to North Carolina are often surprised that an offer here usually comes with two separate deposits. They sit side by side on the standard Offer to Purchase and Contract, and they do different jobs.
The due diligence fee
The due diligence fee is paid directly to the seller, usually within days of the contract being signed. In exchange, you get a due diligence period: a window in which you can inspect the house, arrange your loan, review the survey and title, and walk away for any reason or no reason.
The fee is negotiable, and it is generally not refundable if you decide not to buy. If you close, it is credited toward your purchase price. Think of it as the price of taking the house off the market while you investigate.
The earnest money deposit
Earnest money is held in a trust account, typically by the closing office or a brokerage, and not by the seller. If you end the contract before the due diligence period expires, the earnest money comes back to you. If you back out after that deadline without a contractual reason, the seller is usually entitled to keep it.
How to size them
There is no fixed amount for either. A seller comparing offers looks at the due diligence fee as a sign of commitment, so in a competitive situation buyers offer more of it. That also means more money at risk if the inspection goes badly.
We help buyers decide by looking at what recent offers in that neighborhood included, how long the house has been listed and how much inspecting the house is likely to need. An older house with a crawl space deserves a longer period and a more careful number.
The deadline matters
The due diligence period ends at 5:00 PM on the date written in the contract. Inspections, repair negotiations and your loan decision all need to be settled before then. We build the calendar backward from that date on the day the contract is signed.
This article is general information about buying and selling homes in North Carolina. It is not legal, tax or lending guidance, and things may have changed since it was published.
