Almost every buyer we work with asks the same question within the first ten minutes: how much money do I have to put down to make an offer? In North Carolina the answer involves two separate payments, and they do two entirely different jobs.
The due diligence fee is paid straight to the seller when the contract is signed. What it buys is time — an agreed period in which you can inspect the house, get the appraisal done, arrange the loan, look at the survey, and decide. During that period you can walk away for any reason at all, or for no reason. The fee is generally not refundable; if you close, it is credited toward what you owe.
The earnest money is different. It is a deposit held by an escrow agent, and it shows the seller you are serious. If you terminate during the due diligence period you normally get it back. If you walk after that period has ended, without a right to, that is usually when it is at risk.
So the fee is the price of the right to change your mind, and the deposit is the pledge that you will not waste everybody's time.
How much should either one be? There is no table. It depends on the price, the condition of the house, how long you need for the inspection and the loan, and — most of all — what the house is likely to attract. On a well-priced house in Burlington or Mebane that will see several offers in a weekend, a strong due diligence fee is often what separates two otherwise similar offers, because it is the part the seller keeps if you change your mind. On a house that has been sitting for two months, it is much less important than the closing date.
What we do before you write an offer is work out how much time you actually need. If your lender needs three weeks and the well test takes two, a fourteen-day due diligence period is not brave, it is a trap. Then we decide what the fee should be in the light of that, and what the earnest money should be.
One more North Carolina detail worth knowing early: closings here are handled by an attorney, not a title company. You will choose one, and they will handle the title search, the deed, the payoff and the money. Ask us for names if you do not have one — we work with several in Alamance County and the choice is yours, not ours.