What if the money you pay right after going under contract in North Carolina is not a deposit at all, but a fee you may not get back? If you are buying in South Charlotte or Union County, the due diligence fee is a key part of your offer and timeline. It can help you win a home, and it can also be money you lose if you walk away. In this guide, you will learn what the due diligence fee is, how it compares to earnest money, what amounts are common locally, and how to protect yourself while staying competitive. Let’s dive in.
What the due diligence fee is
In North Carolina, most residential purchases use a standard Offer to Purchase and Contract that includes a negotiated due diligence period and a due diligence fee. You pay this fee to the seller when your offer is accepted, or by the deadline in the contract. In return, you get the exclusive right to investigate the property and to terminate the contract for any reason during the due diligence period.
- The fee is typically paid directly to the seller or the seller’s attorney.
- The seller usually keeps the fee if you terminate during the due diligence period.
- If you close, the fee is credited to your purchase price at settlement.
Your exact rights and deadlines are defined by your written contract. Ask your agent and closing attorney to walk you through the dates and delivery instructions the moment your offer is accepted.
Due diligence vs. earnest money
These two items are easy to confuse, but they serve different purposes.
Due diligence fee
- Purpose: Secures your exclusive right to inspect and walk away during the due diligence window.
- Timing: Paid at acceptance or by a contract deadline.
- Who holds it: Typically the seller or seller’s attorney, not in escrow.
- Refundability: Generally nonrefundable if you terminate during due diligence, but credited to you at closing.
Earnest money deposit
- Purpose: Shows good faith and sits in escrow per the contract.
- Timing: Often due within a few business days of acceptance, per the contract.
- Who holds it: An escrow or closing agent, such as a closing attorney or broker, in a trust account.
- Refundability: Usually refundable if you terminate within contract protections, including the due diligence period. If protections expire and you breach, the seller may keep it depending on the contract and dispute procedures.
Practical takeaway
- The due diligence fee is like paying for an option period.
- Earnest money is a deposit held in escrow that follows the contract’s contingency rules.
Timeline in South Charlotte and Union County
While every deal is unique, many Charlotte-area contracts follow a similar arc.
Day 0: Offer accepted
You execute the purchase agreement. You deliver the due diligence fee to the seller and the earnest money to escrow by the deadlines in your contract.
During due diligence
This period is negotiated. Locally, buyers and sellers often agree to 5 to 14 days, with shorter windows such as 3 to 5 days used in highly competitive situations.
During this time you:
- Book and complete inspections, including general home inspections and any specialized checks if needed.
- Coordinate with your lender, submit documents, and track appraisal timing.
- Order or review title work and survey as needed.
- Decide whether to request repairs or credits, or proceed as is.
If you terminate during this period, the seller usually keeps the due diligence fee and your earnest money is typically returned per the contract.
After due diligence ends
You no longer have an unrestricted right to terminate. Your remaining rights are tied to specific contract contingencies. Whether earnest money is refundable at that point depends on your contract. The due diligence fee is generally not returned unless the contract says otherwise.
Closing window
Typical Charlotte-area closings run about 30 to 45 days from acceptance, but can be shorter or longer based on lender timelines and seller needs.
How much should you expect to pay?
There is no fixed amount by law. The fee and the due diligence period are negotiated for each property. In South Charlotte and Union County, amounts vary by price point and market conditions.
- Entry-level or lower-priced homes: commonly a few hundred to a few thousand dollars.
- Mid-market single-family homes: often in the low thousands, for example 1,000 to 5,000 dollars, with higher figures in very competitive situations.
- Higher-priced homes: larger fees are common, sometimes framed as a percentage of the price, such as 0.5 to 1 percent or more, depending on competition.
Earnest money is often similar to or larger than the due diligence fee. In many markets, earnest money ranges from about 1 to 2 percent of the purchase price, but it is highly negotiable.
These are common ranges, not promises. Current norms shift neighborhood by neighborhood. Your agent will help you calibrate based on the specific home and market snapshot.
Budget example for buyers
The costs below are illustrative only. Always get current quotes from your lender, inspector, and closing attorney.
For a hypothetical 350,000 dollar home:
- Due diligence fee: 1,500 to 3,500 dollars, paid to the seller.
- Earnest money deposit: about 3,500 dollars if using a 1 percent example, held in escrow.
- Home inspections: about 350 to 1,000 dollars depending on size and scope.
- Appraisal fee: about 450 to 700 dollars if required by your lender.
Total cash needed soon after going under contract could be roughly 5,800 to 8,700 dollars in this scenario. Your actual numbers will depend on your contract, loan type, and vendors.
Risks to understand
Before you choose your amount, understand the trade-offs.
- Losing the fee: If you terminate during the due diligence window, you usually forfeit the due diligence fee to the seller.
- Overextending: Offering a large nonrefundable fee can help you win, but it increases your exposure if inspections change your plans.
- Financing after due diligence: If your financing fails after the due diligence period and your contract does not protect you, your earnest money may be at risk. The due diligence fee is usually not returned.
Talk with your agent and lender about timelines, appraisal speed, and how to align your due diligence window with what your team can realistically deliver.
Ways to protect yourself and stay competitive
You can make a stronger offer without taking on unnecessary risk.
- Shorten the due diligence period only if your team can move quickly on inspections and lender steps.
- If you need more time, consider offering a somewhat higher due diligence fee to balance a longer window.
- Prioritize inspections early. Aim to inspect the roof, structure, and major systems first so you have time to reassess.
- Consider a modest due diligence fee with stronger earnest money to show commitment while limiting nonrefundable exposure.
- Match your offer to seller needs. If the seller values speed, shorten timelines if your lender and inspector can meet them.
What happens if there is a dispute?
Earnest money sits in escrow. If you terminate properly and the seller blocks the release, the contract provides dispute procedures that may involve the escrow agent and legal steps. The due diligence fee, once paid, usually belongs to the seller unless your contract clearly states otherwise or the seller breaches. Your agent and closing attorney can explain the process and your options under your specific contract.
Post-acceptance checklist
Use this list the moment your offer is accepted.
- Confirm due diligence fee delivery method, amount, and deadline, and who should receive it.
- Deliver earnest money to the escrow agent by the deadline and obtain a receipt.
- Schedule inspections immediately so they occur within your due diligence window.
- Notify your lender and submit documents quickly so underwriting and the appraisal can start.
- Order or review title work with your closing attorney.
- Keep records of your contract, addenda, inspection reports, and all receipts.
- Align on a negotiation plan for repairs or credits, including decision points before the due diligence period ends.
Local offer strategies that work
In South Charlotte and Union County, sellers often favor strong due diligence fees, shorter due diligence periods, and clear evidence of financing readiness. Consider these strategies with your agent:
- Pair a shorter due diligence period with confirmed inspector availability and lender timelines.
- If you prefer a longer window, strengthen your fee within your comfort level, and show proof of funds for deposits.
- Communicate clearly in your offer package. Show that you understand the process and will move on schedule.
Scenarios you might face
- Competitive listing with multiple offers: You might shorten due diligence to 5 days and offer a higher fee to stand out, but only if inspections and lender steps can fit that schedule.
- Balanced market: You may negotiate a longer due diligence window with a mid-range fee and stronger earnest money.
- Higher-priced property: Expect the due diligence fee to scale upward as a percentage of price. Align your fee with your confidence in the property and your timeline.
Bottom line
The due diligence fee is a powerful tool in North Carolina. It buys you time to investigate and gives the seller confidence to hold the home for you. In South Charlotte and Union County, right-sizing your fee and timeline can make the difference between winning and overexposing yourself. Work closely with your agent, lender, and closing attorney to set the right amount, schedule inspections fast, and keep your contract protections aligned with your goals.
Ready to plan your next steps with a finance-forward local advisor? Connect with Denise Gordon for clear guidance on due diligence fees, timelines, and offer strategy.
FAQs
What is the North Carolina due diligence fee?
- It is a negotiated fee paid to the seller for your right to investigate and terminate for any reason during the due diligence period, and it is usually credited to you at closing.
How is the due diligence fee different from earnest money?
- The fee is typically paid to the seller and is generally nonrefundable if you terminate during due diligence, while earnest money is held in escrow and follows the contract’s contingency rules.
How long is a typical due diligence period in the Charlotte area?
- Many local deals use 5 to 14 days, with shorter windows such as 3 to 5 days in highly competitive situations, subject to what you negotiate.
Is the due diligence fee refundable if inspections find problems?
- Usually no. If you terminate during the due diligence period, you typically forfeit the fee to the seller, though your earnest money is usually returned if you terminate per the contract.
How much due diligence fee should I offer in South Charlotte or Union County?
- It depends on price, competition, and your risk tolerance. Common ranges run from hundreds to several thousand dollars, scaling higher for higher-priced homes.
What happens to my earnest money if I cancel during due diligence?
- If you cancel within the due diligence period according to the contract, your earnest money is typically returned because it is held in escrow.
Can the seller keep both my due diligence fee and earnest money?
- The seller usually keeps the due diligence fee if you terminate during due diligence. Whether the seller keeps earnest money depends on the contract and whether protections have expired.
What upfront cash should I plan for right after acceptance?
- Plan for the due diligence fee, earnest money deposit, inspection costs, and often an appraisal fee, which together can total several thousand dollars depending on the home and vendors.
