What happens to your money if you back out of a home purchase in North Carolina? If you are shopping in Asheville or Buncombe County, you will hear two terms a lot: due diligence fee and earnest money. They sound similar, but they play very different roles in your contract and your risk.
In a competitive mountain market, it is easy to overpay in the wrong place or miss a key deadline. You deserve simple guidance that helps you protect your budget and still write a winning offer.
In this guide, you will learn what each payment does, how refundability works in North Carolina, typical Asheville ranges, and smart strategies to match your goals. You will also get a clear timeline and checklist for the first two weeks after offer acceptance. Let’s dive in.
Quick definitions in North Carolina
Due diligence fee
The due diligence fee is a payment you make directly to the seller in exchange for the right to inspect the property and terminate the contract for any reason during the agreed due diligence period. This fee is typically nonrefundable once paid. If you close, it is usually credited to you at settlement.
Earnest money deposit
Earnest money is a good‑faith deposit that shows you intend to complete the purchase. It is usually held in escrow by the listing brokerage or the closing attorney named in the contract. If you terminate properly under the contract, earnest money is typically refunded. If you default outside your rights, the seller may be entitled to it under the contract.
How the money flows
Who holds each payment
- Due diligence fee: Paid to the seller. It becomes the seller’s money when paid, and it is not held in escrow.
- Earnest money: Deposited with the named escrow holder, often the closing attorney or listing brokerage. It stays in trust until closing or a signed release.
Refundability basics
- Due diligence fee: Normally nonrefundable to you if you terminate. If you close, it is usually credited to you at settlement.
- Earnest money: Refunded if you validly terminate under the contract. At risk if you default outside your termination rights.
Typical timing and deadlines
- Due diligence fee: Often due at acceptance or within 1 to 2 business days. The exact deadline is negotiated in the offer.
- Earnest money: Commonly due within a short window, such as 3 business days, to the named escrow holder. The contract sets the deadline.
- Due diligence period: Negotiated by the parties. Common ranges are 3 to 14 days, but can be longer or shorter based on market conditions and your needs.
Plan your inspections, appraisal, and lender tasks to fit inside your due diligence period. If you need more time, negotiate it up front.
Asheville norms and ranges
Market context
Asheville and Buncombe County can be competitive, especially for desirable mountain homes and second‑home properties. In multiple‑offer situations, sellers often look closely at the size of the due diligence fee, the earnest money deposit, and the length of the due diligence period.
Typical ranges
- Due diligence fee:
- Less competitive or lower‑priced properties: several hundred to a few thousand dollars, often around 500 to 2,500 dollars.
- Higher‑priced or more competitive listings: several thousand to 10,000 dollars or more. Luxury or hot listings can push higher to stand out.
- Earnest money:
- Often a flat amount or a percentage of the price. A common rule of thumb is 1 to 3 percent.
- Lower‑priced homes may see 1,000 to 5,000 dollars. Higher‑priced homes often land in the thousands to tens of thousands.
These are observations, not rules. Amounts vary by submarket, property type, and how hot the listing is.
Example A: Moderate competition, 350,000 dollars price
- Due diligence fee: 2,000 dollars to the seller at acceptance.
- Earnest money: 3,500 dollars (about 1 percent) to escrow within 3 business days.
- Due diligence period: 10 days to complete inspections and review documents.
Example B: Very competitive, 650,000 dollars price
- Due diligence fee: 5,000 dollars to make the offer more attractive.
- Earnest money: About 1.5 percent, such as 9,750 to 10,000 dollars, to escrow.
- Due diligence period: 5 days to keep the offer tight, paired with fast scheduling.
Offer strategy: which to increase and why
Ways buyers strengthen offers in Asheville
- Increase the due diligence fee so the seller receives funds that are typically nonrefundable up front.
- Increase earnest money to signal commitment and reduce perceived risk of default.
- Shorten the due diligence period while offering a stronger due diligence fee. This can appeal to sellers who want certainty.
- Keep due diligence modest but set a higher earnest money deposit to show good faith while preserving some flexibility.
- Allow inspections but limit repair requests to keep the offer clean.
Key trade‑offs
- A larger due diligence fee increases your risk if you back out during due diligence, since that fee usually stays with the seller.
- Waiving or rushing inspections can expose you to hidden issues. If you later terminate outside your rights, you may lose earnest money and face legal claims.
- Smaller earnest money can protect your cash but may make your offer less competitive.
Practical protections
- Book inspections immediately and align appraisal and lender milestones with your due diligence deadline.
- Write clear dates for due diligence end, earnest money deposit, and how notices are delivered.
- If you terminate, send written notice exactly as the contract requires and keep proof of delivery.
- Confirm who holds earnest money and when it must be deposited. Ask for a receipt when it is placed in escrow.
- If inspections uncover issues, consider repair credits instead of canceling if the home still fits your goals.
Timeline checklist for buyers
At offer acceptance
- Deliver the due diligence fee to the seller as the contract specifies.
- Deposit earnest money with the named escrow holder by the deadline and get a receipt.
- Confirm contact information and delivery methods for all notices.
During the due diligence period
- Schedule and complete inspections: general home, pest, radon, septic and well if applicable.
- Review seller disclosures, HOA documents, survey, and any available title information.
- Coordinate with your lender on application and appraisal orders.
If you plan to terminate during due diligence
- Send written termination before the due diligence deadline using the delivery method in the contract.
- Keep confirmation of delivery. Earnest money release should follow the contract.
Pre‑closing
- Confirm that earnest money will be credited on your closing statement.
- Confirm whether the due diligence fee is credited at closing per the contract.
Common mistakes to avoid
- Waiting to schedule inspections until late in your due diligence period.
- Assuming a short due diligence window is fine without checking contractor and inspector availability.
- Mixing up who holds which funds. The seller holds the due diligence fee; the escrow holder holds earnest money.
- Missing the written notice requirement or the exact deadline for termination.
- Setting deposit amounts that do not match market conditions, which can weaken your offer in a competitive situation.
How disputes are handled
If there is a disagreement about who should receive earnest money, it usually stays in escrow until you and the seller reach an agreement or follow the dispute steps in your contract. Strict compliance with notice rules and deadlines matters. Local closing attorneys in Buncombe County are often involved in resolving escrow questions, and contracts may call for mediation, arbitration, or court action if needed.
Your Asheville partner
Buying in the mountains is personal. You want the right home, the right timelines, and the right protections. A local guide can help you balance due diligence and earnest money so your offer stands out without adding unnecessary risk.
If you are planning a move to Asheville or a nearby mountain town, let’s talk strategy and next steps for your search. Reach out to Joellen Maurer for clear, local guidance.
FAQs
What is the difference between due diligence and earnest money in NC?
- The due diligence fee is paid to the seller for your right to investigate and cancel during the due diligence period, and it is usually nonrefundable. Earnest money is held in escrow and is typically refunded if you terminate properly.
If I cancel during due diligence in Asheville, do I get money back?
- You generally receive your earnest money back if you terminate correctly within the due diligence period. The due diligence fee usually stays with the seller.
Is the due diligence fee applied at closing in North Carolina?
- In most transactions, the due diligence fee is credited to you at closing and reduces the amount you bring to settlement.
How much due diligence and earnest money is typical in Buncombe County?
- Due diligence fees often range from a few hundred to several thousand dollars, and can exceed 10,000 dollars in competitive or higher‑priced deals. Earnest money is often 1 to 3 percent of the price, but amounts vary.
What due diligence period should I expect in Asheville?
- Many buyers negotiate 3 to 14 days, depending on market conditions and scheduling. Shorter periods can be attractive to sellers if you can complete inspections quickly.
Can a seller keep both my due diligence fee and earnest money?
- Only if you default outside your contract rights. If you terminate properly under the contract, the earnest money is typically refunded, but the seller keeps the due diligence fee.
