The due diligence fee is completely different than the earnest money deposit. The due diligence fee is a payment from the buyer to the seller that is non-refundable and is negotiated between the buyer and seller. If the property gets to closing, then the due diligence fee is deemed part of the buyers down payment toward closing costs. Additionally, the buyer pays the due diligence fee directly to the seller, which gives the buyer exclusive rights to inspect the property and close on the contract without interference from other potential buyers. The due diligence fee is designed to compensate the seller for taking the property off the market.
Whereas the earnest money deposit is money that is given to the seller or their agent to show good faith when making an offer to purchase the seller’s property. The earnest money deposit is negotiated between the buyer and seller and is normally a small percentage of the purchase price of the property. The buyer gives the earnest money deposit to the escrow agent, who holds it as a credit toward the closing costs if the property closes. Additionally, earnest money is refundable if the buyer chooses to back out of the contract during the due diligence period.
In North Carolina, when you go under contract, you will encounter the due diligence fee and the earnest money deposit. The only rare time the due diligence fee will not stay with the seller is if the seller cannot hold up their end of the contract. Moreover, neither the due diligence fee nor earnest money deposit is mandatory. Therefore, when making a decision on the due diligence fee and earnest money deposit, make sure you know what liquid money you have and talk to your real estate agent for advice.
Disclaimer No Attorney-Client Relationship Created by Use of this Website: Neither your receipt of information from this website nor your use of this website to contact The Lancaster Law Firm or one of its attorneys creates an attorney-client relationship between you and The Lancaster Law Firm. As a matter of policy, The Lancaster Law Firm does not accept a new client without first investigating for possible conflicts of interests and obtaining/sending a signed engagement letter or email correspondence. Accordingly, you should not use this website to provide confidential information about a legal matter of yours to Lancaster Law Firm. No Legal Advice Intended: This website includes information about current, past, and future potential legal issues and legal developments for educational purposes only. Such information is provided for informational purposes only and may not reflect the most recent legal developments. Posted information is not intended, and should not be taken, as legal advice for a particular set of circumstances you may be experiencing. You should contact an attorney for advice on specific legal problems.