If you are buying a home in Durham, you will likely write two checks early in the process. One is a due diligence fee. The other is earnest money. They work together in North Carolina, but they are not the same. Understanding the difference helps you write a stronger offer and protect your interests. In this guide, you will learn what each payment does, typical amounts in Durham, how timelines and contingencies work, and smart strategies to use in a competitive market. Let’s dive in.
Key terms in North Carolina
Due diligence fee: A one-time, negotiated payment you make directly to the seller when your offer is accepted. In exchange, you get an unrestricted right to terminate the contract during the agreed due diligence period. This fee is typically nonrefundable to you if you terminate. If you close, it is usually credited to you at settlement.
Earnest money (earnest money deposit): A deposit you deliver to the escrow holder, typically the closing attorney named in the contract. It shows good faith and is credited to you at closing. Whether you get it back if you terminate depends on the contract and timing.
Side-by-side comparison
| Feature | Due Diligence Fee | Earnest Money |
|---|---|---|
| Who receives it | Paid to the seller at acceptance | Held in escrow by the closing attorney or escrow agent |
| Purpose | Buyer’s option to terminate during due diligence | Good-faith deposit toward purchase |
| Refundable? | Generally nonrefundable to buyer if buyer terminates | Returned if you terminate within due diligence or under a valid contract contingency; otherwise may be forfeitable |
| Applied at closing | Typically credited to you | Credited to you |
| Timing | Paid at contract acceptance | Delivered within a short window after acceptance, often 2–5 business days |
What buyers in Durham typically see
Amounts vary by price point, property condition, and how competitive the listing is. Use these ranges as general examples, not guarantees.
Due diligence fee (typical ranges):
- Homes under roughly $300,000: about $500 to $2,000.
- Around $300,000 to $600,000: about $1,500 to $7,500.
- Above $600,000: about $5,000 to $15,000 or more.
- In multiple-offer situations or some new construction, sellers may receive $10,000 to $25,000+.
Earnest money (typical ranges):
- Often a flat amount or a percentage. A common guidance is about 1 to 2 percent of the price, but it varies by deal.
- Many Durham purchases fall between $1,000 and $5,000 for lower-priced homes, and $3,000 to $15,000 for higher-priced homes.
Durham can be competitive. When inventory is tight, sellers often favor higher due diligence fees and shorter due diligence periods. If you are relocating or need more time for inspections, plan your offer to match your timeline while staying appealing to the seller.
Typical Durham timelines
- Due diligence period: Commonly 5 to 14 days for move-in ready resales. If you need septic or well testing, or more complex inspections, 14 to 30 days is more typical. New construction can run longer.
- Earnest money delivery: Often 2 to 5 business days after acceptance, per contract.
- Loan commitment date: Frequently 21 to 30 days after acceptance, but can vary by lender and loan type.
- Closing timeframe: Often 30 to 60 days from contract to settlement.
Dates in the contract control your rights and remedies. Put reminders on your calendar for the Due Diligence Date, loan commitment date, and closing.
How contingencies interact with DD and EM
North Carolina uses the due diligence period as the main window for inspections and negotiation.
- Inspection items: You can terminate for any reason during your due diligence period. If you do, your earnest money is generally returned, and the seller keeps the due diligence fee.
- Financing: If your contract includes a financing milestone and you cannot obtain the loan by the deadline, you may be able to terminate and recover earnest money if the contract conditions are met. The due diligence fee typically remains with the seller.
- Appraisal: If the appraisal comes in low, your options depend on your contract. You may renegotiate, bring cash to cover the gap, or terminate if a relevant contingency applies.
- Title, survey, HOA: Review during due diligence. Raise any objections promptly and follow the contract for next steps.
What happens in common scenarios
- You terminate during due diligence: Earnest money usually returns to you. The seller keeps the due diligence fee.
- Financing falls through after due diligence: Outcome depends on your contract and whether you met deadlines. Earnest money may return if a valid contingency applies. The due diligence fee typically stays with the seller.
- You back out after due diligence with no contract right: The seller may keep your earnest money and could pursue further remedies.
- Seller defaults: You may pursue specific performance or damages. Handling of funds depends on remedies and any settlement.
Pre-offer checklist for Durham buyers
- Get a firm preapproval and confirm your lender’s timeline for appraisal, underwriting, and closing.
- Decide your risk tolerance. Ask yourself how much nonrefundable due diligence fee you are comfortable with.
- Discuss with your agent whether to emphasize a higher due diligence fee or a higher earnest money deposit for this property.
- Set a realistic due diligence period. Balance your inspection needs with the seller’s preference for a shorter window.
Your due diligence period action plan
Start the clock the day your offer is accepted. Move fast.
- Schedule a general home inspection right away. Add radon, termite/WDI, HVAC, and air quality if needed.
- If relevant, order septic and well inspections and review permit history.
- Request HOA documents and review bylaws and financials if the home is in an association.
- Review title and survey if available and raise objections promptly.
- Work toward final loan approval by submitting all documents quickly.
- Get contractor estimates for repair negotiations early.
- Decide in writing before the Due Diligence Date to proceed or terminate.
Smart negotiation strategies
- Strength through DD fee: A larger due diligence fee plus a shorter due diligence period can stand out in multiple offers. The trade-off is higher risk if you terminate.
- Strength through earnest money: A larger earnest money deposit shows commitment while preserving more protection if you terminate under your contract rights. It is held in escrow and credited at closing.
- Balance approach: Consider a moderate due diligence fee, a slightly larger earnest money deposit, and a shorter due diligence period. This can appeal to the seller while keeping meaningful protection for you.
- Extending due diligence: If you need more time, you can ask for an extension and may offer an additional fee or other consideration.
Notes on new construction and relocation
- New construction and infill: Builders may request larger due diligence fees or deposits tied to build schedules. Expect longer timelines for certain milestones.
- Relocation timeline: If you are moving to Durham on a tight schedule, negotiate a due diligence period that fits inspections and travel plans, or lean on remote inspections and quick scheduling.
Risk management reminders
- Treat the due diligence fee as a cost of the option to walk away. Budget for the possibility that you may not recover it.
- Confirm that your earnest money is delivered to the escrow holder within the required timeframe and that the escrow holder is identified in the contract.
- Use licensed professionals for inspections and rely on your closing attorney and lender for clear guidance on deadlines and documentation.
Final thoughts
North Carolina’s two-payment system gives you flexibility, but it also shifts some risk to you through the due diligence fee. In Durham, the right mix of due diligence fee, earnest money, and a well-planned timeline can make your offer competitive without putting you in a risky position. If you want help shaping a strong offer and navigating inspections, timelines, and negotiations, connect with the local team that does this every day. Reach out to Shaw Realty Group to talk through your goals and next steps.
FAQs
What is the difference between due diligence and earnest money in NC?
- The due diligence fee goes to the seller for your right to terminate during due diligence and is generally nonrefundable, while earnest money is held in escrow and may be returned if you terminate under your contract rights.
How much are typical due diligence fees in Durham?
- Amounts vary, but many buyers see about $500 to $2,000 under $300,000, $1,500 to $7,500 from $300,000 to $600,000, and $5,000 to $15,000+ above $600,000, with higher amounts in competitive situations.
When do I pay earnest money in North Carolina?
- Contracts often require delivery within 2 to 5 business days after acceptance to the named escrow holder, typically the closing attorney.
Do I get my earnest money back if I terminate during due diligence?
- Generally yes, earnest money is returned if you terminate within your due diligence period, while the seller keeps the due diligence fee.
What due diligence period should I request in Durham?
- Many resale homes use 5 to 14 days, while complex inspections or specific property needs may require 14 to 30 days; negotiate a window that lets you complete inspections on time.
