Ever wondered why a seller in Hickory asks for both a due diligence fee and an earnest money deposit? You are not alone. These two deposits serve different purposes in North Carolina and can change your leverage, your risk, and your peace of mind. In this guide, you will learn what each deposit means, when and how they are paid, typical amounts in Catawba County, and how to protect your money. Let’s dive in.

What each deposit means in NC

Due diligence fee

The due diligence fee is a negotiated, usually non-refundable payment you make directly to the seller. In return, you get the unrestricted right to investigate the property and terminate the contract for any reason during the agreed due diligence period. The fee compensates the seller for taking the home off the market and is typically credited to you at closing.

Key points:

• Usually non-refundable once paid, unless you and the seller agree otherwise.
• Gives you a broad right to walk away during the due diligence period for any reason.
• Credited to your purchase at settlement.

Earnest money deposit

Earnest money is a good-faith deposit held by an escrow agent, such as the listing broker, a closing attorney, or a title company. It shows you intend to close and becomes part of your funds at settlement. Whether it is refundable depends on the contract and whether you meet your deadlines.

Key points:

• Held in a trust or escrow account, not paid to the seller directly.
• Typically refundable if you terminate within your contractual rights.
• May be forfeited if you default after losing your termination rights.

How the NC contract handles them

Most buyers and sellers use the North Carolina standard residential Offer to Purchase and Contract forms. These forms clearly separate the due diligence fee, the due diligence period, and the earnest money provisions.

When you pay each

• Due diligence fee: Paid to the seller at or immediately after mutual acceptance. You should document receipt.
• Earnest money: Delivered to the named escrow agent within the timeframe written into your contract, commonly within three business days of acceptance in practice.

Where funds go and how they apply

• Due diligence fee: Goes to the seller, then is typically credited to your purchase price at closing.
• Earnest money: Held in escrow, then applied to your purchase price or closing costs at settlement.

Refunds, defaults, and remedies

If you cancel during due diligence

If you terminate in writing during the due diligence period, you typically get your earnest money back. The due diligence fee usually stays with the seller.

If you cancel after the due diligence deadline

If you terminate after the due diligence period without a contractual right, the seller may have the right to keep your earnest money as liquidated damages or seek other remedies stated in the contract. The due diligence fee remains with the seller.

If the seller defaults

If a seller fails to perform, you may be entitled to a return of your earnest money and other remedies allowed by the contract. The due diligence fee is part of the purchase consideration and is typically credited back to you if the seller’s breach prevents closing, but the exact outcome depends on the contract and settlement practices.

If there is an escrow dispute

Escrow agents usually require a written agreement from both parties or a court order to release earnest money when there is a dispute. Many disputes are resolved through negotiation, mediation, or litigation, often with help from closing attorneys.

Typical amounts in Hickory and Catawba County

There is no fixed rule for how much to offer. Amounts are driven by the price point, competition for the property, and your overall strategy.

• Due diligence fee: In softer markets, some buyers offer as little as $100 to $500. In balanced or competitive conditions, several hundred to several thousand dollars is common, sometimes around one quarter to one percent of the purchase price in more competitive scenarios.
• Earnest money: Commonly ranges from $500 to several thousand dollars, often around one percent of the purchase price as prices rise.

What moves numbers up or down

• Market conditions: Tight seller markets often bring larger due diligence fees and shorter inspection windows. Buyer-friendly markets may allow smaller fees and longer periods.
• Property type and complexity: Older homes and properties with septic systems or private wells are common in parts of Catawba County. You may want a slightly longer due diligence period to complete septic inspections, well flow tests, and any needed contractor evaluations.

How much to offer

There is no single right answer. Have funds ready for both deposits before you write an offer. In a buyer-friendly scenario, you can start modestly. In a competitive scenario, you may need a larger due diligence fee and a higher earnest deposit to stand out, balanced against your comfort with risk.

Timeline example for a Hickory purchase

Here is a clear example that reflects common practice. Your contract controls the actual dates and deadlines.

• Day 0: Offer is accepted and the contract is signed. You deliver the due diligence fee to the seller the same day or as agreed.
• Day 0 to Day 3: You deliver earnest money to the named escrow agent within the contract deadline, commonly within three business days.
• Due diligence days (for example, 10 days): You complete inspections, lender approval steps, and review title, HOA, septic, well, and permit records. You may terminate for any reason within this period by giving written notice. If you terminate, your earnest money is typically returned, and the seller keeps the due diligence fee.
• End of due diligence period: If you do not terminate, the contract continues. Any remaining contract conditions are handled under the terms of the agreement.
• Closing date (often 30 to 45 days from acceptance): Both deposits are credited to your funds at settlement. If you default after losing your termination rights, the seller may keep your earnest money and pursue other remedies in the contract.

Smart strategies to protect your funds

• Prepare funds in advance: Have both deposits liquid and ready before you write the offer.
• Match timelines to needs: Ask for enough due diligence days to complete septic, well, structural, and systems checks that are common in the area.
• Use the period wisely: The due diligence period is your time for full property and document review. Be thorough.
• Escrow safety: Always get a written receipt for earnest money. Verify wiring instructions by phone using a known number to guard against fraud.
• Name the escrow agent: Make sure your contract clearly identifies the escrow agent and their trust account details.
• Document termination: If you decide to terminate during due diligence, give written notice according to the contract and keep proof of delivery.
• Understand liquidated damages: Know that the seller may retain earnest money if you default after the due diligence period.

Common pitfalls to avoid

• Mixing up the deposits: The due diligence fee is usually non-refundable, while earnest money can be refundable if you follow the contract.
• Missing delivery deadlines: Late earnest money can cause defaults and disputes.
• Short due diligence: Rushing inspections can leave you exposed after the deadline.
• Vague escrow terms: Failing to name and confirm the escrow agent can cause confusion and delay.
• Wiring mistakes: Do not rely on emailed instructions without voice verification to a known, trusted number.

A Hickory due diligence checklist

Use your due diligence period to verify the items that matter most in Catawba County:

• Home inspections and any needed specialists for older systems.
• Septic inspection and pump records, plus repair quotes if needed.
• Well flow and water quality testing when applicable.
• Title search, survey needs, and HOA documents if the property is in an association.
• County GIS, tax history, and permit records to confirm improvements and compliance.
• Lender pre-approval updates, appraisal timing, and insurance quotes.

Work with a local team you can trust

Your due diligence fee and earnest money are more than line items. They are negotiation tools that affect your risk and your ability to compete. With the right plan, you can balance strength and protection, especially when you need extra time for septic or well evaluations or multiple contractor visits.

Kendall Real Estate is a senior-led, boutique brokerage serving Hickory, Conover, and nearby lake communities. You work directly with experienced principals who align timelines, coordinate inspections, and connect you with vetted local attorneys and contractors. That hands-on approach helps you meet deadlines, avoid costly mistakes, and close with confidence.

Ready to craft a smart offer strategy for your next Hickory purchase? Connect with Kendall Real Estate to get a tailored plan.

FAQs

Are due diligence fees refundable in North Carolina?

• Generally no. The due diligence fee is usually non-refundable and stays with the seller if you cancel during or after the due diligence period, unless you and the seller agree otherwise.

Is earnest money refundable in Hickory home sales?

• It depends on the contract and your timing. If you terminate within your rights, such as during due diligence or under a contract contingency, earnest money is typically returned. If you default after losing termination rights, the seller may keep it.

How much due diligence and earnest money should I budget in Catawba County?

• Budget for both. Due diligence can range from a few hundred dollars to several thousand depending on competition, while earnest money often ranges from $500 to several thousand dollars, commonly around one percent of the price as values rise.

Who holds earnest money in North Carolina?

• The contract names the escrow agent, often the listing broker, a closing attorney, or a title company. Confirm their trust account procedures and get a written receipt for your deposit.

Can the due diligence fee be applied to my closing costs?

• Yes. At settlement, the due diligence fee is typically credited toward your purchase price or closing costs, according to the contract.