Due diligence money is a North Carolina-specific contract term — it’s a payment the buyer gives directly to the seller (not held in escrow) in exchange for the right to inspect the property, pursue financing, and generally investigate the home during an agreed-upon due diligence period. Unlike earnest money, due diligence money is non-refundable in almost all circumstances, even if the buyer walks away.
This structure is different from many other states and is important for sellers to understand. During the due diligence period, the buyer can terminate the contract for any reason (or no reason) and still keep their earnest money deposit, but they forfeit the due diligence fee to the seller as compensation for taking the home off the market during that window.
The amount of due diligence money is negotiated as part of the offer, and in competitive markets, buyers often offer larger due diligence amounts as a way to make their offer more attractive to sellers — it signals seriousness and gives the seller some compensation even if the deal falls through.
For sellers, understanding this distinction matters when evaluating offers: two offers at the same price can look very different once you account for due diligence and earnest money amounts, since a higher due diligence fee gives you more protection if the buyer terminates during their inspection period.