What Is Due Diligence Money?

Due diligence money is a fee the buyer pays directly to the seller when the home goes under contract.

This money compensates the seller for taking the home off the market while the buyer investigates the property and decides whether to move forward with the purchase.

During the due diligence period, the buyer has time to look more closely at the home and the details of the transaction. This may include:

• Home inspection

• Pest inspection

• Septic inspection, if applicable

• Property survey

• Appraisal

• Title search

• Loan qualification and approval

• Repair negotiations

During this period, the buyer can usually terminate the contract for any reason, or no reason at all.

The important thing to know is this: due diligence money is typically non-refundable. If the buyer walks away during the due diligence period, the seller usually keeps that money.

However, if the sale closes, the due diligence fee is credited toward the buyer’s purchase of the home.

What Is Earnest Money?

Earnest money is often described as “good faith” money.

It shows the seller that the buyer is serious about purchasing the home. Unlike due diligence money, earnest money is usually held by a third party, such as an escrow agent or attorney, until closing.

If the transaction closes, earnest money is credited toward the buyer’s purchase.

If the buyer terminates the contract during the due diligence period, earnest money is typically refundable to the buyer.

If the buyer breaches the contract after the due diligence period has ended, the seller may be entitled to keep the earnest money, depending on the terms of the contract and the situation.

The Simple Difference

Here is the plain-English version:

Due diligence money is paid to the seller for the buyer’s right to inspect, investigate, and decide whether to move forward. It is usually non-refundable.

Earnest money is good faith money that shows the buyer intends to purchase the home. It may be refundable if the buyer terminates properly during the due diligence period.

Both can be credited toward the buyer’s purchase at closing.

How Much Should You Offer?

There is no set amount for due diligence or earnest money. Both are negotiated between the buyer and seller and written into the contract.

The right amount depends on several factors, including:

• The price of the home

• The neighborhood

• Market conditions

• Buyer competition

• The seller’s motivation

• The length of the due diligence period

• The overall strength of the offer

In a competitive market, sellers may prefer a higher due diligence fee and a shorter due diligence period. That gives the seller more confidence that the buyer is serious and less likely to walk away.

Buyers, on the other hand, usually prefer a lower due diligence fee and a longer due diligence period. That gives them more time and less financial risk while they inspect the property, finalize financing, and make sure the home is the right fit.

Most accepted offers land somewhere in the middle.

Why This Matters

Due diligence and earnest money can have a real impact on your offer, your risk, and your negotiating position.

For buyers, these amounts affect how much money is at risk if you decide not to move forward.

For sellers, they help measure how serious a buyer is and how much confidence you can have in the offer.

The strongest offer is not always just the highest price. The details matter — including due diligence money, earnest money, the due diligence timeline, financing terms, repair expectations, and closing date.

Helping You Make a Clear Decision

At Ivy & Trellis, we help buyers and sellers in Waxhaw and Union County understand the full offer, not just the headline number.

Whether you are writing an offer or reviewing one, we will help you think through the terms clearly so you can make a smart, confident decision.

Real estate contracts can feel overwhelming at first, but the right guidance makes the process much easier to understand.