If you’re buying a home in North Carolina, you’ll hear two terms right away: Due Diligence Money and Earnest Money.
Most buyers have no idea what the difference is and that confusion can lead to stress, hesitation, or even losing out on a home.

This guide breaks it down in the simplest way possible so you know exactly what each one means and how it protects you (and the seller) during the transaction.

1. What Is Due Diligence Money?

Due Diligence Money (often called “DD money”) is a non-refundable fee the buyer pays directly to the seller when the offer is accepted.

Think of it like this:
👉 You’re paying the seller for time.

It buys you the right to inspect the home, negotiate repairs, secure financing, and decide whether you want to move forward with the purchase.

Key Facts About Due Diligence Money:

• Paid directly to the seller after the offer is accepted

• Non-refundable (except very rare circumstances)

• Credited back to the buyer at closing

• Shows the seller you’re serious

• Gives the buyer the right to back out for any reason during the due diligence period

If the buyer walks away for any reason, the seller keeps the DD money.

This is unique, North Carolina is one of the few states that uses this system.

2. What Is Earnest Money?

Earnest Money (EM) is another good-faith deposit, but it works differently.

Think of Earnest Money like:
👉 Money that sits in a safe until closing.

Key Facts About Earnest Money:

• Held in a trust/escrow account (not given to the seller)

• Refundable if the buyer terminates during the due diligence period

• Credited back to the buyer at closing

• Typically optional, but strengthens an offer

If the buyer backs out after the due diligence period ends, the seller usually gets both the DD money and the Earnest Money.

3. Simple Breakdown: What’s Refundable?

4. Why Does North Carolina Use Both?

NC uses both deposits because the due diligence system makes the process:

• Cleaner (fewer legal disputes)

• Faster (buyers have flexibility)

• More attractive to sellers (they’re compensated for taking the home off the market)

It creates a balanced structure where:

• Buyers gain time and flexibility

• Sellers gain certainty and compensation

5. What’s a Normal Amount to Offer?

Amounts vary based on price range and competition, but here are general Triangle-area trends:

For most homes:

• Due Diligence Money: $2,000–$10,000

• Earnest Money: 1% of purchase price (optional but common)

In competitive markets (Cary, Apex, parts of Raleigh):

• DD can range from $15,000–$40,000+
  Buyers need stronger deposits to stand out.

6. What Happens at Closing?

Both Due Diligence and Earnest Money
👉 get credited back toward your closing costs or down payment.
It’s not extra money you’re “losing”, it just comes earlier in the timeline.

7. Which One Protects the Buyer More? Which Protects the Seller?

Better for Buyers: Earnest Money

• Refundable

• Held safely in escrow

Better for Sellers: Due Diligence Money

• Non-refundable

• Paid directly to them

A strong offer usually includes a healthy mix of both.

Final Thoughts

Understanding the difference between Due Diligence and Earnest Money is one of the most important steps in buying a home in North Carolina, especially in a fast-moving market like the Triangle.

The right combination can make your offer more competitive and protect your financial interests.

If you have questions about how much you should offer or how these deposits apply to your situation, I’m here to guide you through the process with clarity and confidence.