Buying in Nashville, NC and hearing people talk about the due diligence fee? You are not alone. North Carolina has a unique system that asks buyers to put skin in the game upfront. That can feel risky when you are trying to make a smart, competitive offer without overreaching.
This guide breaks down what the due diligence fee is, how it works alongside earnest money, common local timelines and amounts, and how to structure a strong offer in Nashville’s market. You will see simple examples, a step-by-step checklist, and tips to keep your risk in check. Let’s dive in.
What the due diligence fee is
In North Carolina, the due diligence fee is a negotiated, upfront payment you make directly to the seller when the contract is delivered. It compensates the seller for taking the home off the market while you have an exclusive window to investigate, finalize your loan, and decide whether to move forward.
That window is called the due diligence period. During this period, you may terminate the contract for any reason if you give notice by the deadline spelled out in the agreement. At closing, the fee is usually credited back to you toward your cash to close.
For the exact language and where you enter the fee and dates, review the NC REALTORS Residential Offer to Purchase and Contract. You can see how the form lays out the due diligence fee, the due diligence period, and earnest money in the standard forms section at the NC REALTORS website. We recommend reviewing the official form overview at the NC REALTORS legal and standard forms page for context.
Due diligence vs. earnest money
The due diligence fee and earnest money are separate. They serve different purposes:
- Due diligence fee: Paid to the seller at contract delivery. Generally nonrefundable if you terminate during the due diligence period. Credited to you at closing if you proceed.
- Earnest money: A deposit normally held in escrow by a closing attorney or broker and credited to you at closing. If you terminate properly during the due diligence period, earnest money is typically returned to you per the contract and escrow rules.
For more on escrow and broker obligations in North Carolina, check the North Carolina Real Estate Commission’s consumer guidance on escrow and earnest money.
How the money moves
Here is how funds typically flow in a North Carolina purchase, using simple examples:
At contract delivery: You pay the due diligence fee directly to the seller. You also deposit earnest money with the agreed escrow holder, often a closing attorney, by the deadline in the contract.
Example A: You terminate during the due diligence period
- Price: $300,000
- Due diligence fee: $2,500 paid to the seller (the seller keeps this)
- Earnest money: $1,000 in escrow, returned to you when you terminate on time
- Outcome: You lose $2,500. Your earnest money comes back per the contract.
Example B: You close
- At closing, the $2,500 due diligence fee is credited to your cash to close. The $1,000 earnest money is also applied per the contract.
Example C: You default after the due diligence deadline
- If you fail to close without a permitted termination, the seller’s remedies can include keeping the earnest money and the due diligence fee and seeking damages, depending on the contract terms. Speak with an attorney for any default scenario.
The big takeaway: The due diligence fee is the amount you risk if you use your right to terminate during the due diligence period. The earnest money path depends on the contract and escrow rules.
Local norms in Nashville and Nash County
Nash County is generally more affordable than areas closer to Raleigh, and competition varies by neighborhood and price point. Move-in-ready homes at lower price ranges can draw multiple offers, while older or rural homes may see longer days on market. That mix affects how buyers use the due diligence fee and how long they ask for the due diligence period.
Common patterns we see across smaller North Carolina counties apply in Nashville as well:
- Due diligence period length: Often 7 to 21 days. Shorter periods, around 7 days, are used when you want to be competitive and can move fast on inspections and loan steps. Longer timelines, around 10 to 21 days, are helpful if you need extra time for inspections or underwriting.
- Due diligence fee amounts: Wide range. In less-competitive situations, fees can be modest, from a few hundred to a few thousand dollars. In competitive situations, buyers sometimes offer larger fees, from several thousand to much higher on premium properties. There is no state-mandated standard.
- Earnest money: Often a few hundred to a few thousand dollars, scaled to price and local expectations.
What matters most is current local demand at your price point and your readiness on inspections and financing. A strong local agent can share what sellers in Nashville are accepting this month and how to structure your terms so you stand out without overextending.
Risks to watch
Understanding the risk tradeoffs will help you pick the right structure for your offer.
- If you terminate during the due diligence period: You typically lose only the due diligence fee. Earnest money is usually returned if you followed the contract and notice rules.
- If you miss the due diligence deadline: Your unilateral termination right ends. Trying to back out later can put you in breach and put both the due diligence fee and earnest money at risk.
- If financing falls through after the deadline: Outcomes depend on whether you handled financing and appraisal contingencies during the due diligence period. Coordinate your lender timeline with the due diligence deadline.
- If you use a very small fee in a competitive setting: Your offer may look weaker next to others. If you use a very large fee, your potential loss increases if you terminate. Find the balance that matches your comfort level and timeline.
Build a competitive but prudent offer
Before you write an offer, set yourself up to move quickly without adding unnecessary risk:
- Get a strong lender pre-approval with a clear timeline to close. Ask how quickly they can move from underwriting to a clear-to-close.
- Work with a local Nashville agent who tracks what sellers are accepting for fee amounts and period lengths right now. These norms shift with the market.
- Decide which inspections you need, then pre-schedule or line up inspectors who can meet a short due diligence window if needed.
Offer structure options
Here are common strategies and what they signal to a seller:
- Larger due diligence fee with a 7 to 10 day period: Shows commitment and speed. Best if your inspections and lender can realistically meet the timeline.
- Moderate due diligence fee, short period, and larger earnest money: Signals seriousness while concentrating most risk in the fee. Earnest money is typically returned if you terminate on time, so this can be a balanced approach.
- Waive or reduce the period: Very risky. This can win in multiple-offer situations, but you give up your unilateral termination right. Not recommended for first-time buyers who have not completed inspections or secured financing.
- Appraisal or financing gap solutions: Instead of a very large fee, some buyers offer to cover part of an appraisal shortfall or show a backup financing plan. These tools have different legal and financial effects than the fee, so make sure you understand them before using them.
Timing and logistics
Once under contract, move fast and follow the form’s notice rules exactly.
- Inspections: Book general, septic, well, survey, and any specialty inspections immediately. For older homes, plan for possible lead or asbestos testing when appropriate.
- Lender: Confirm rate lock and underwriting milestones that fit inside your due diligence period or as early as possible.
- Earnest money: Confirm who holds it, when it must be deposited, and how any refund is handled per the contract.
Simple Nashville examples
These quick scenarios show how the numbers and timelines can play out.
Key questions to ask your agent or attorney
Use this quick checklist to avoid surprises:
- Where will earnest money be held and when is it deposited? Make sure the escrow holder and timeline are written in the contract.
- What are my exact calendar deadlines? Note the start and end of the due diligence period, earnest money deposit deadline, and any inspection objection date. Put reminders on your phone.
- If I terminate, what notice must I send and to whom? Follow the contract’s notice provisions to the letter.
- If I need more time, what might the seller expect? Extensions sometimes require a higher fee or a price adjustment.
- How will the fee show on my closing statement? Confirm that your due diligence fee is credited at closing.
Where the contract spells this out
The NC REALTORS Residential Offer to Purchase and Contract is the standard form most buyers and sellers use. It includes:
- Blanks for the due diligence fee, due diligence period, and earnest money
- Instructions for delivering notice and where earnest money is held
- Remedies if one party breaches
For form context and guidance, visit the NC REALTORS legal and standard forms page. For escrow and trust account rules, see the North Carolina Real Estate Commission’s consumer resources.
Work with a local partner who can move fast
A strong offer is not just the number you write. It is also your ability to inspect quickly, manage repairs, and keep your lender on schedule. As a Nashville-area buyer, you benefit when your agent can coordinate both the real estate details and the on-the-ground work.
Foote Real Estate Group pairs local market expertise with hands-on builder and contractor relationships. That means faster inspection scheduling, practical repair advice, and a smoother path from offer to closing. If you are weighing how much to put toward the due diligence fee or how short to make your period, we can show you what is working in Nashville right now and help you structure a smart offer.
Ready to talk strategy for your next Nashville home? Connect with the team at Foote Real Estate Group.
FAQs
Is the due diligence fee the same as earnest money in North Carolina?
- No. The due diligence fee is paid to the seller for your exclusive due diligence period and is generally nonrefundable if you terminate during that window, while earnest money is a separate escrow deposit typically returned if you terminate properly during the period.
Can I get my due diligence fee back if the seller cancels the sale in Nashville, NC?
- If the seller materially breaches the contract, you may be entitled to recover the fee and other remedies, but outcomes depend on the contract terms. Speak with an attorney for your specific situation.
What happens if I miss the due diligence deadline by a day in North Carolina?
- Missing the deadline can remove your unilateral termination right and may place you in breach, risking both the fee and earnest money. Treat deadlines as firm and notify your agent or attorney early if timing is tight.
Should I offer a larger due diligence fee to win a multiple-offer situation in Nash County?
- Sometimes a larger fee helps, but it increases your potential loss if you terminate. Balance competitiveness with your comfort level and your ability to complete inspections and loan steps within the period.
