The Difference Between Due Diligence and Earnest Money

What Is The Difference Between Due Diligence Money and Earnest Money?

If you are shopping for a home and are hearing terms you aren’t familiar with such as due diligence money and earnest money, you might be wondering what the difference between the two is, how they affect you, how much they will cost you, and if you can get your money back if the contract is cancelled. This article should help answer some of your questions starting with the difference between due diligence money and earnest money.

“Due Diligence” is the buyer’s opportunity to engage in a process of further investigation of the property and the transaction as described in the Offer to Purchase form within a period of time agreed to by the seller and buyer. The buyer will want to inquire about anything bearing on a decision to either move forward with the contract or to terminate it.  Some common considerations of the “Due Diligence” period are; home, pest, and septic inspections, property survey, appraisal, title search, loan qualification and application, repair negotiation, etc. The buyer has until 5:00 PM on the expiration date of the due diligence period to terminate the contract for any or no reason at all. The due diligence fee is Non-Refundable however, if the buyer terminates the contract during the due diligence period, the Earnest money deposit is refundable.

Deciding how much due diligence time is needed requires thinking about how long it will take to schedule appointments for inspectors to come out and inspect the home and how long it takes to review documents like the HOA rules and regulations. During the due diligence time the buyer is able to cancel the contract for any reason, or no reason at all.  Due diligence money is non-refundable The good news is the money is typically credited towards the purchase of the home at closing.

Earnest money is “good faith” money. The buyer is showing the seller they are serious about buying the home.  If the seller is unable to fulfill the contract the buyer will get the earnest money back.  If the buyer is unable to fulfill the contract the seller can keep the earnest money.  Earnest money is refundable if the contract is cancelled within the due diligence time period and is credited toward the purchase at closing if the sale goes through.

In general, there is no definite amount set for due diligence or earnest money.   The amount of earnest money paid could be a percentage of the purchase price but both the due diligence fee and earnest money deposit will be decided between the buyer and seller and written into the contract.

For more information, please visit http://www.ncrec.gov/Brochures/EarnestMoney.pdf
North Carolina Offer to Purchase and Contract, standard form 2-T Revised 1/2015

“Due Diligence” Questions and Answers

Contact us for more information about how much earnest money is required to start building a new home.

The post The Difference Between Due Diligence and Earnest Money appeared first on McKee Homes Blog.


Keep up to date On Instagram

PREVIOUS
NEXT
Have you heard?! Check out the AMAZING contribution that Pat McKee and Julie Russo have made to the Rockhouse Foundation! 

#WeBuildLifeChangingMoments not only in the great state of North Carolina, but in Jamaica as well! 

The Rockhouse Foundation is dedicated to transforming the places where Jamaica’s children learn and supporting the great people who teach them.

Visit the link in our bio to learn more about their contribution 💜
Coastal Homebuyers and Realtors‼️

Looking for a beautiful new coastal home? Well, look no further! This Biltmore 2020 featuring our designer-curated selections, located in our Seaside Bay Community, is AVAILABLE!

This is a family-friendly community with outdoor living in mind including a community fire pit, gas grill, picnic table, and pavilion.

Visit the link in our bio for more info and book your private 1:1 tour before this opportunity is gone!
We're only a few weeks away from our HighRidge GRAND OPENING events!

Schedule your private 1:1 tour and become a VIP to unlock exclusive access to upcoming events through the link in our bio!

HighRidge is in a quiet country setting just minutes from downtown Fuquay-Varina and features our single-story Epcon floorplans.
Attention Wilmington-area homebuyers and realtors 🚨

This beautiful Dalton 2020 Craftsman is AVAILABLE!

Colbert Place is located in Leland, just across the Cape Fear River, and features upscale living at an affordable price in the heart of North Brunswick County. Homeowners can enjoy:
 🏠 3 beds & 2 baths 
 🏠 1,807 sq. ft. of open-concept living 
 🏠 Quartz countertops 
 🏠 Stainless steel appliance package 
 🏠 Spacious family room with fireplace
 🏠 .....and SO much more!

Visit the link in our bio for more information, and book your private 1:1 tour TODAY!
The first Raleigh Design Studio appointment is in the books! 

We cannot wait to build and design many more #LifeChangingMoments here in the Raleigh area!

To start building your own #LifeChangingMoment, visit the link in our bio to check out our new home opportunities throughout the Raleigh, Wilmington, Fayetteville, and Pinehurst areas.
Attention Homebuyers & Realtors!

This Palazzo 2020 Classic that features our designer-curated selections, located in our newest Raleigh-area community, HighRidge, is AVAILABLE!

HighRidge is in a quiet country setting just minutes from downtown Fuquay Varina, and features our Epcon single-family floorplans.

Visit the link in our bio for more info and book your private 1:1 tour before this opportunity is gone!
This Palazzo 2020 Classic that features our designer-curated selections, located in our newest Raleigh-area community, HighRidge, is AVAILABLE!

HighRidge is in a quiet country setting just minutes from downtown Fuquay Varina, and features our Epcon single-family floorplans.

Visit the link in our bio for more info and book your private 1:1 tour before this opportunity is gone!
Enjoy coastal living from the $200's! 

New South Bridge is an amenity-rich family-friendly new home community located in Bolivia, NC. The close proximity to great beaches and quaint coastal towns such as Southport and Shallotte, make this a perfect location for family fun or retirement heaven! 

Start building your #LifeChangingMoment through the link below!
Our Townes at Gateway Commons Community, located in Wake Forest, has several townhomes AVAILABLE!

Visit the link in our bio to learn more about these beautiful 3-story townhomes, part of our already-upgraded Autograph Series of homes.
Join us in welcoming these new homeowners to their beautiful new home!

Thank you for choosing and trusting McKee Homes to build your #LifeChangingMoment

Visit the link in our bio to check out our new home opportunities throughout the Raleigh, Wilmington, Fayetteville, and Pinehurst areas!