Guide · North Carolina

How the North Carolina offer to purchase and due diligence period work

How North Carolina's Offer to Purchase and Contract works for first-time buyers: the due diligence fee, earnest money, the deadline, and how to fit NCHFA help inside it.

Quick answer:

In North Carolina you usually write two checks with an offer: a due diligence fee paid straight to the seller, and earnest money held in trust. During the due diligence period you can walk away for any reason, in writing, and normally get the earnest money back. The fee is usually gone unless the seller breaches. Set the deadline long enough for your appraisal, loan approval and any down payment program paperwork.

What this guide walks you through

North Carolina does not use the inspection contingency most other states use. Instead, the standard residential contract (the Offer to Purchase and Contract, known as Form 2-T) gives the buyer a paid window to investigate the house and quit if they want to. This guide takes you through that window in order:

Know the two payments and how each one can be lost.
Pick a due diligence end date that fits your loan.
Use the period to check the house, the title and your financing.
Read the disclosure statements.
Ask for repairs.
Decide, in writing, before the deadline.

Step 1: Know the two payments

Per the North Carolina Real Estate Commission, the due diligence fee is negotiated and paid by the buyer to the seller for the right to do due diligence. It goes to the seller directly, usually when the contract is signed. Earnest money is a separate deposit, held in trust until closing.

	Due diligence fee	Earnest money
Who holds it	The seller, right away	An escrow agent named in the contract
If you close	Credited to you at closing	Credited to you at closing
If you quit during the period	Seller usually keeps it	Usually refunded to you
If you quit after the period	Seller keeps it	At risk

The Commission notes that the fee comes back only in narrow cases: the seller materially breaches, the house is destroyed or badly damaged before closing, or an addendum says so. Treat the fee as money you could lose.

How much? There is no set amount. The Commission says it depends on market conditions, days on market, each side's situation and how long the period runs. Your agent can tell you what is typical for that listing.

Step 2: Pick a due diligence end date

The period starts on the contract's effective date and ends on the date in paragraph 1(j) of Form 2-T. Its length is negotiable. The Commission advises buyers to allow enough time for the appraisal, loan approval and repairs found in inspections.

If you are using down payment help, add time. Count backward from what your program needs:

NCHFA loans: your participating lender must reserve the NC Home Advantage Mortgage in NCHFA's system, and if every borrower is a first-time buyer, one of you needs an approved homebuyer education certificate.
House Charlotte: 8 hours of HUD-approved education and counseling are required before closing, with 4 of those hours one-on-one.
Concord: the City's program asks for a signed contract at least 45 days before closing.
Community Partners Loan Pool: ask a member organization about it before you sign a contract, since CPLP needs at least 2 hours of in-person counseling.

Tip: finish your homebuyer class before you start touring. The NCHFA certificate is good for one year, so it will not expire on a normal search.

Step 3: Do the work inside the period

The Commission lists what buyers should look into during due diligence. Use it as a checklist:

Home inspection, plus any specialty inspections the inspector recommends
Survey, if you want the lot lines confirmed
Appraisal ordered by your lender
Title search by your closing attorney
Final loan qualification, including the down payment program
Homeowners insurance quotes (on the coast, wind and flood quotes too)
HOA rules, dues and any special assessments

Get the insurance quote early. A high premium can push your debt-to-income ratio past NCHFA's 45% cap, and you want to learn that while you can still leave.

Step 4: Read the disclosure statements

Sellers of most homes give buyers the Residential Property and Owners' Association Disclosure Statement. If it was not delivered before or when you made your offer, state law (G.S. 47E-5) lets you cancel the contract. That right ends at the earliest of these:

the end of the third calendar day after you receive the statement
the end of the third calendar day after the contract was made
settlement or move-in

Read the form the day you get it. Many answers will say "no representation," which means the seller is not making any statement about that item. That is a reason to inspect, not a reason to relax.

Step 5: Ask for repairs

You can ask for as many repairs as you want, and the seller does not have to agree to any. Put requests in writing and give the seller a response date that is still inside your period. You then have three choices: accept the seller's answer, renegotiate, or quit.

Repairs don't have to be finished before due diligence ends. Per the Commission, the seller must complete agreed repairs in a good and workmanlike manner before settlement. Check them at your final walk-through. Refusing you that walk-through is a breach.

Step 6: Decide before the deadline

You alone decide whether to terminate. You can quit for any reason, and you don't need the seller's consent. The notice must be in writing and delivered during the period. If the seller agrees to extend your deadline, get that in writing too.

Miss the deadline and you lose the free exit. From then on, backing out puts your earnest money at risk.

How the fee fits with down payment help

The due diligence fee and earnest money come out of your pocket before closing. At closing they are credited back toward your costs. NCHFA caps cash back to the buyer at $2,500, and it must come from your own verified out-of-pocket payments. So if your assistance ends up covering more than you need, you may get some of that early money back, but not more than $2,500.

Some city programs also want your own cash in the deal. Durham and Concord each ask for at least $1,000 of the buyer's own funds. Your due diligence fee and earnest money can help show that, so keep the receipts and bank records.

Common mistakes to avoid

Agreeing to a 10-day period when your lender says the appraisal takes three weeks
Offering a fee you can't afford to lose
Telling the seller "we're out" by phone instead of in writing
Getting an insurance quote after the deadline
Paying from an account your lender can't trace

Before you write an offer, check your eligibility so you know which program, price range and timeline you're working with.

Reader questions

Is the due diligence fee refundable in North Carolina?

Usually not. The fee goes straight to the seller and is credited to you only if you close. Under Form 2-T it comes back only in narrow cases, such as a material breach by the seller or serious damage to the house before closing.

What is the difference between due diligence money and earnest money?

The due diligence fee pays for your right to investigate and walk away, and the seller keeps it if you leave. Earnest money is held in trust and is normally refunded if you terminate in writing before the due diligence deadline.

How long should my due diligence period be with an NCHFA loan?

Long enough for inspection, appraisal, loan approval and your program's paperwork. Ask your lender how long the appraisal and NCHFA reservation take, then add a cushion for repair talks.

Can I back out after the due diligence period ends?

You can try, but your earnest money is then at risk, and the seller keeps the due diligence fee. The free exit only lasts until the deadline in paragraph 1(j).

Can down payment assistance pay my due diligence fee?

Not up front, because the fee is due when you sign. At closing it is credited toward your costs. NCHFA allows up to $2,500 back to you, and only from money you paid out of pocket that the lender verified.

Print it out: our North Carolina readiness checklist puts the rules, papers, steps and lender questions on one sheet with boxes to tick. Get the PDF