If you are buying a home in North Carolina, you will hear two terms right away: due diligence deposit and earnest money deposit. They sound similar, but they play very different roles in the transaction. Understanding how each one works can help you feel more confident as you move through the process.
What Is the Due Diligence Deposit?
The due diligence deposit is a fee the buyer pays directly to the seller after both sides sign the contract. This payment gives the buyer the right to investigate the property during the due diligence period. That includes inspections, appraisals, surveys, and anything else needed to make an informed decision.
A key point is that the seller keeps this money regardless of whether the sale closes. If the buyer walks away for any reason during the due diligence period, the seller keeps the deposit because the seller took their home off the market and gave the buyer time to investigate. If the closing happens as planned, the deposit is credited back to the buyer at closing.
What Is Earnest Money?
Earnest money is a separate deposit that shows the buyer is serious about completing the purchase. This money is held in a trust account by the closing attorney or real estate firm. Unlike the due diligence deposit, earnest money is usually refundable if the buyer cancels within the due diligence period. If the buyer backs out after that period ends, the seller may be entitled to the earnest money.
Just like the due diligence fee, earnest money is applied toward the buyer’s closing costs if the sale moves forward.
How the Two Deposits Work Together
Think of the due diligence deposit as a payment for time and access, while earnest money is a sign of commitment. Both together help create a firm offer in a competitive market, especially in areas like Chatham County and Pittsboro, where well-priced homes move quickly.
Why This Matters for Buyers and Sellers
For buyers, knowing the difference helps you decide how confident you feel about the property before structuring your offer. For sellers, these deposits offer protection and clarity about the buyer’s seriousness.
If you are planning a move in Chatham County or want expert guidance on the North Carolina buying process, Lisa Skumpija is here to help you navigate each step with confidence.