Buying Strategy
Closing Costs, Earnest Money, and Due Diligence Fees in the Carolinas: What Charlotte Buyers Really Need in Cash
Closing costs, earnest money and due diligence fees in the Carolinas: how the NC due diligence fee and SC termination fee work, what closing costs include, who pays what, seller credit limits, and a real Charlotte cash-to-close example.
13 min read
By Sir Ashley Harrison
Most buyers plan for one number: the down payment. Then they go under contract in North Carolina and learn they owe the seller a due diligence fee by the next banking day, a separate earnest money deposit to the closing attorney, inspection and appraisal fees within a week or two, and closing costs at the end that nobody quite explained.
None of that is bad news if you see it coming. All of it is stressful if you don't.
This guide explains every dollar you'll need to buy a home in the Charlotte area, on both sides of the state line: what the due diligence fee and earnest money are and when you can lose them, what closing costs include and who customarily pays them, how South Carolina's system differs, and how to put it all together into a real cash-to-close plan.
The short answer
In North Carolina, buyers typically pay a nonrefundable due diligence fee directly to the seller when the contract is signed and an earnest money deposit that's held in trust. Both are credited toward the purchase price at closing. Closing costs vary by loan and location, and once you add prepaid taxes and insurance, a common planning range is about 2% to 4% of the price on top of your down payment. In South Carolina, the standard REALTORS contract uses a due diligence period with an optional termination fee instead. Know exactly how much cash you need, when each payment is due, and when it's at risk, before you make an offer. (Not sure what you can afford yet? Start with our affordability calculator.)
The North Carolina due diligence fee
The due diligence fee is unique to North Carolina's standard Offer to Purchase and Contract. It's a negotiated amount the buyer pays directly to the seller in exchange for the right to terminate the contract for any reason during the due diligence period.
When it's due. Under the 2026 version of the standard form, the fee is due on the effective date of the contract, and the buyer has until the end of the next banking day to pay it before being in breach. If it isn't paid, the seller can demand payment in writing and may terminate.
Is it refundable? Generally no. If you terminate during the due diligence period, the seller keeps the fee. It's refunded only in limited situations, such as when the seller breaches the contract.
What happens at closing. If you close, the due diligence fee is credited toward the purchase price. It isn't an extra cost. It's money you pay early, and put at risk.
How much? There's no standard amount. It's negotiated, and it moves with the market. In a competitive situation, a larger fee makes your offer stronger, because it tells the seller you're serious. In a slower market, with homes taking longer to sell, buyers often have room to offer less. Your agent should look at what's typical for that price range and neighborhood right now.
Earnest money
Earnest money is a separate deposit, held in trust by an escrow agent, usually the closing attorney or a brokerage trust account. It's your good-faith commitment to close.
When it's due. The amount and deadline are written into the contract.
Is it refundable? In North Carolina, if you terminate before the due diligence period ends, you generally get your earnest money back. If you fail to close after the due diligence period ends without a contractual reason, such as the seller's breach, the seller may be entitled to keep it. That's why the due diligence deadline is the most important date in the contract.
What happens at closing. Like the due diligence fee, earnest money is credited toward what you owe.
| Item | Due diligence fee | Earnest money |
|---|---|---|
| Paid to | The seller, directly | An escrow agent, often the closing attorney, held in trust |
| When due | Effective date; by the end of the next banking day | By the deadline in the contract |
| If you terminate during due diligence | Seller keeps it | Generally refunded to you |
| If you don't close after due diligence, without a contractual reason | Seller keeps it | Seller may be entitled to keep it |
| At closing | Credited toward the price | Credited toward the price |
| Its job | Buys your right to walk away | Shows you intend to close |
How South Carolina handles it
South Carolina's system looks similar but works differently. Since 2022, the SC REALTORS residential agreement has used a due diligence model: the buyer gets a negotiated due diligence period to inspect and investigate, and can terminate during that period by delivering a written notice, along with a termination fee if the contract includes one.
The termination fee is paid to the seller only if the buyer terminates during due diligence, and it's negotiated, ranging from a few hundred to several thousand dollars depending on the market. Under the agreement, it generally isn't owed if the buyer terminates because of financing, appraisal, or wood infestation report issues. Earnest money is held in escrow and credited at closing.
Here's the part nobody tells you. In South Carolina, if a buyer tries to terminate but fails to deliver the termination fee properly, the termination may not be valid. Read the notice and fee requirements carefully, and follow them exactly.
Because the forms, deadlines, and customs differ across the line, don't assume the North Carolina rules apply in Fort Mill, Tega Cay, or Indian Land.
Want your exact number? We'll build a free cash-to-close plan for your price range: what to offer for the due diligence fee and earnest money, estimated closing costs and prepaids, how much seller credit to ask for, and when each dollar is due. Get my cash-to-close plan
What closing costs include
Closing costs are the fees and prepaid items due at closing, separate from your down payment. Here's what buyers typically pay for in both Carolinas.
| Item | What it is | Notes |
|---|---|---|
| Lender fees | Origination, underwriting, and any discount points you choose | Compare on page 2 of your Loan Estimate |
| Appraisal and credit report | Lender-required valuation and credit check | Appraisal is often paid during due diligence |
| Title insurance | Lender's policy (required with a loan) and owner's policy (optional) | Owner's policy is a one-time premium that protects you |
| Closing attorney and title exam | Title search, closing, and recording | Both Carolinas close through attorneys |
| Survey | Confirms boundaries and improvements | Optional but often wise |
| Recording fees | Recording your deed and deed of trust | Set by the county |
| Prepaid interest | Interest from closing to the end of the month | Higher if you close early in the month |
| Escrow deposits | Starting reserves for property taxes and insurance | Often the biggest surprise |
| First-year homeowners insurance | Usually paid in full before or at closing | Get quotes early |
| HOA fees | Transfer or capital contribution fees in some communities | Who pays varies by contract and community |
| Not at closing | Inspections are paid during due diligence |
According to LodeStar Software Solutions data reported by Rocket Mortgage, average closing costs in North Carolina in 2025 were about $2,480, or about 0.56% of the price, including recording fees and taxes, well below the national average. That figure doesn't include prepaid items like escrow deposits for taxes and insurance, your first year's homeowners insurance, or discount points, which can add thousands. That's why a planning range of about 2% to 4% of the price, depending on your loan and location, is a safer budget.
Who customarily pays what
| Item | North Carolina | South Carolina |
|---|---|---|
| Transfer tax | Excise tax, $1 per $500 of price; seller | Deed recording fee, $1.85 per $500; customarily seller |
| Seller's attorney and deed preparation | Seller | Seller |
| Mortgage payoff and liens | Seller | Seller |
| Buyer's loan costs and title insurance | Buyer | Buyer |
| Property taxes | Prorated between buyer and seller | Prorated between buyer and seller |
| Agent compensation | Set by listing and buyer agreements; negotiable | Set by listing and buyer agreements; negotiable |
| The rule | Custom, not law | Custom, not law |
Everything is negotiable. Customs describe who usually pays, not who must.
Seller credits: how to get help with closing costs
Sellers and builders can agree to pay part of your closing costs. Loan programs cap how much they can contribute. For conventional loans on a primary home, the cap is generally 3%, 6%, or 9% of the price depending on your down payment. FHA generally allows up to 6%, and VA caps certain seller concessions at 4% of the home's value, with ordinary closing costs treated separately.
Since the 2024 changes to how buyer agent compensation is handled, some buyers also negotiate for the seller to cover part or all of their agent's compensation. Your agent should explain how that interacts with your loan's limits. And with homes taking longer to sell than a few years ago, seller credits are often on the table. On new construction, builders frequently offer closing-cost help tied to their preferred lender. Compare it with an outside lender before you accept, using our Loan Estimate guide.
Putting it together: a real cash-to-close example
| Item | When | Amount |
|---|---|---|
| Due diligence fee (example) | At contract, to the seller | $2,000 |
| Earnest money (example) | At contract, to the escrow agent | $5,000 |
| Inspections and appraisal | During due diligence | Varies; often several hundred dollars each |
| Down payment | At closing | $42,750 |
| Closing costs and prepaid items (about 3%) | At closing | About $12,825 |
| Credit for due diligence fee and earnest money | At closing | Minus $7,000 |
| Closing wire | At closing | About $48,575 |
| Total cash needed | Across all stages | About $55,575, plus inspections and appraisal |
Notice the timing. You'll need several thousand dollars available the day you go under contract, and more within a week or two for inspections and the appraisal, long before the big closing wire. Plan your savings and transfers so the money is where it needs to be on time.
How to protect your money
Line up inspections before you offer. The faster you inspect, the more of your due diligence period you have to negotiate or walk away.
Get your loan moving immediately. Lock your rate, order the appraisal, and send documents quickly. In North Carolina, a slow lender can eat into your due diligence period.
Know your deadlines. Put the due diligence date, earnest money deadline, and settlement date in your calendar the day you sign.
Verify every wire by phone. Real estate wire fraud cost Americans more than $275 million in 2025, according to the FBI. Call your closing attorney at a number you've verified independently before sending money.
Read your Closing Disclosure. You'll receive it at least three business days before closing. Compare it with your Loan Estimate and ask about any differences.
Mistakes that cost buyers money
Offering a large due diligence fee on a house you haven't researched. If you walk away, that money is gone.
Letting the due diligence period expire before the appraisal or loan approval comes back. After the deadline, your earnest money is at risk too.
Forgetting prepaid items. Escrow deposits and the first year of insurance can surprise buyers who only budgeted for fees.
Assuming the seller will cover closing costs. Ask for it in the offer, and make sure your loan program allows it.
The bottom line
In the Carolinas, the money you need to buy a home arrives in stages: the due diligence fee and earnest money at contract, inspection and appraisal fees during due diligence, and your down payment and closing costs at the end. In North Carolina, the due diligence fee is nonrefundable and the due diligence deadline protects your earnest money. In South Carolina, a termination fee and strict notice rules take their place. Plan for closing costs of roughly 2% to 4% of the price, negotiate seller credits when the market allows, and verify every wire.
Real estate isn't complicated, but it is emotional, and money questions are where most buyers feel it. The math is easy. The discipline is knowing your number, and your deadlines, before you sign.
Get your cash-to-close plan
If you're buying in the Charlotte area, this is exactly what I help people work through. My team, The Firm Real Estate Team, powered by LPT Realty, works across greater Charlotte and on the South Carolina side of the line. Tell us your price range, down payment, and the areas you're considering, and we'll build your cash-to-close plan: what to offer for the due diligence fee or termination fee and earnest money in today's market, an estimate of your closing costs and prepaid items, how much seller credit to ask for, and a timeline showing exactly when each dollar is due.
When you're ready, request your plan here, book time with me at calendly.com/sirashley, or call 704-746-3566. No obligation and no pressure.
Quick answers
Is the due diligence fee refundable in North Carolina?
Generally no. The buyer pays it directly to the seller, and the seller keeps it if the buyer terminates during the due diligence period. It is refunded only in limited situations, such as a seller breach. If the sale closes, it is credited toward the purchase price.
What is the difference between earnest money and the due diligence fee?
The due diligence fee goes to the seller and buys the right to terminate for any reason during the due diligence period. Earnest money is held in trust by an escrow agent and is generally refunded if the buyer terminates during due diligence, but may go to the seller if the buyer fails to close afterward without a contractual reason. Both are credited at closing.
How much are closing costs in North Carolina?
LodeStar data reported by Rocket Mortgage put average 2025 North Carolina closing costs at about $2,480, or about 0.56% of the price, before prepaid items like escrow deposits and homeowners insurance. Including prepaids and lender costs, many buyers plan for about 2% to 4% of the price.
Does South Carolina use a due diligence fee?
South Carolina's REALTORS agreement uses a due diligence period with an optional, negotiated termination fee paid to the seller if the buyer terminates during due diligence. It generally is not owed for terminations based on financing, appraisal or wood infestation report issues.
Can the seller pay my closing costs?
Yes, if negotiated and within your loan's limits. Conventional loans generally allow 3%, 6% or 9% of the price depending on down payment, FHA generally allows up to 6%, and VA caps certain concessions at 4% of the home's value.
This article is general education, not legal, tax, or lending advice. Contract terms vary; review your specific contract with a North Carolina or South Carolina real estate attorney, and get a Loan Estimate from your lender for exact closing costs. Figures are illustrations based on data available in October 2026.
Sources
- NC REALTORS: Summary of 2026 changes to residential forms (due diligence fee payment)
- NC REALTORS: The Offer to Purchase and Contract and contingent sales
- NC REALTORS: Buyer's rights under Form 2-T if they can't close
- Rosen Hagood: SC residential agreement moves to a due diligence model (2022)
- Best Version Media: South Carolina termination fees vs. earnest money (July 2026)
- Rocket Mortgage: Average closing costs in North Carolina (LodeStar 2025 data)
- Lower: FHA, conventional and VA seller concession limits
- NC Department of Insurance: Title insurance
- NAR: Online real estate fraud climbed to $275M in 2025, FBI says
- CFPB: Closing Disclosure explainer
- Canopy Realtor Association: market data
Blog posts are personal, dated commentary. They follow the editorial policy, but unlike the guides their figures are not checked against a source registry. For cited research, start with the guides.
Thinking about a move?
Talk it through with Sir Ashley
Tell me what you are weighing up and I will tell you what I would look at first.
Or call or text (704) 746-3566.