If you’re buying or selling a home in North Carolina, you need to understand how due diligence works before you sign anything.

North Carolina contracts are different from most states. This is usually the first surprise for people relocating to Charlotte. If you’re moving here, you may also want to read my guide on relocating to Charlotte:
https://sellyourhomecharlotte.com/relocating-to-charlotte/

In North Carolina, the due diligence fee is money the buyer pays directly to the seller for the right to terminate the contract for any reason during the due diligence period. Once the contract becomes effective, that money belongs to the seller. If the transaction closes, it’s credited back to the buyer at closing. If the buyer terminates during due diligence, the seller usually keeps it unless the seller materially breaches the contract.

That’s the simple version.

What catches buyers off guard is that this is not escrow money. It is not held by the closing attorney. It does not sit in trust. It becomes the seller’s property once the contract is effective.

The due diligence period is the time frame negotiated in the contract when the buyer can conduct inspections, evaluate repairs, finalize financing, renegotiate, or walk away. That flexibility comes with risk. If the buyer decides to terminate during that period, the due diligence fee is typically not refunded.

“Material breach” has a specific meaning. It does not mean you didn’t like what showed up on the inspection report. It means the seller failed to perform a contractual obligation.

The contract requires that the due diligence fee be made payable and delivered by the Effective Date. The Effective Date is when the last party signs and acceptance is communicated. It is not something handled later at closing. If a broker temporarily holds the check, North Carolina Real Estate Commission rules require that it be safeguarded and delivered within three business days after acceptance. You can review guidance directly from the North Carolina Real Estate Commission here:
https://www.ncrec.gov

Another common mistake is confusing due diligence with earnest money. They are not the same. The due diligence fee is paid directly to the seller for termination flexibility. Earnest money is typically handled differently and has its own set of rules depending on how the contract ends. Mixing those up can lead buyers to underestimate how much money is actually at risk.

In the Charlotte market, sellers often evaluate certainty as much as price. You can see current Charlotte real estate market conditions here:
https://sellyourhomecharlotte.com/charlotte-real-estate-market-update-october-2025/

A higher purchase price with a very low due diligence fee may feel less secure than a slightly lower price with stronger due diligence. Once the contract is effective, that due diligence fee belongs to the seller. That changes how offers are compared.

For buyers, this means you should treat the due diligence fee as money at risk. Before writing an offer, ask yourself if you are comfortable losing that amount if inspections uncover issues or if you decide not to move forward. If you’re buying and want a step-by-step breakdown of how to structure a strong offer, download my Ultimate Buyer Guide:
https://sellyourhomecharlotte.com/the-ultimate-buyer-guide/

For sellers, the due diligence fee is not just extra money. It is a signal of buyer confidence and a layer of protection against churn. The highest price is not always the strongest offer. Structure matters. If you’re preparing to list, download my Smart Seller Guide:
https://sellyourhomecharlotte.com/the-smart-sellers-guide/

If you would rather talk through your situation directly, contact me here:
https://sellyourhomecharlotte.com/contact/

You can also learn more about me and my experience serving the Charlotte metro area here:
https://sellyourhomecharlotte.com/maureen-mahood/

I’m Maureen Mahood, broker-owner of SellYourHomeCharlotte.com, and I help buyers and sellers throughout the Charlotte metro area make informed decisions.

Frequently Asked Questions About the North Carolina Due Diligence Fee

Is the due diligence fee refundable in North Carolina?

Usually no. Under the standard North Carolina Offer to Purchase and Contract (Form 2-T), the due diligence fee is generally nonrefundable. The most common exception is if the seller materially breaches the contract. Always review your specific agreement and deadlines carefully.

When is the due diligence fee due?

The due diligence fee must be made payable and delivered by the Effective Date of the contract. The Effective Date is when the last party signs and acceptance is communicated. It is not something handled later at closing.

Who receives the due diligence fee?

The seller receives the due diligence fee once the contract becomes effective. It is not held in escrow by the closing attorney.

What is the difference between due diligence and earnest money in North Carolina?

The due diligence fee is paid directly to the seller for the buyer’s right to terminate during the due diligence period. Earnest money is typically handled differently and has separate rules depending on how the contract ends. They serve different purposes and should not be confused.

How much due diligence is typical in Charlotte?

There is no fixed amount. It depends on market conditions, competition, property condition, and negotiation strength. In competitive Charlotte neighborhoods, stronger due diligence can make an offer more attractive, but buyers should only risk what they are comfortable losing.

This article is for educational purposes and applies to North Carolina residential real estate transactions. It is not legal advice. Always review your specific contract and consult your real estate professional or attorney for guidance.