No matter where you live, buying a house is a big deal! Although the basics of the process are the same everywhere, each state has its own process and regulations for real estate transactions. Sometimes individual cities and counties even have their own way of doing things. Here in North Carolina one of our little quirks is the distinction between a due diligence deposit and earnest money. When a buyer makes an offer on a property in NC the offer stipulates two deposits to be made up front, the due diligence and the earnest money. Here's an quick breakdown:

Due diligence is the time period the buyer sets up to further investigate the property and determine that they are truly going to purchase it. This is the time for home, pest, radon, or any other inspections, as well as a survey, appraisal, repair negotiations, and loan qualification. The amount of time for this is up to the buyer and their agent. The due diligence deposit is made to the seller in exchange for their taking the house off the market and allowing the buyer to complete their inspections. This deposit is not refundable even if the buyer discovers issues with the home that cause them to cancel the transaction.

Earnest money, on the other hand, is a deposit made to show the buyer's good faith that they are serious about buying the house. This money is credited toward the purchase at closing and is fully refundable if the buyer cancels during the due diligence period. However, if the buyer backs out of the purchase after the due diligence period the earnest money goes to the seller.

As a buyer it is super important to educate yourself and fully understand the process and where your money is going! This is also why it's incredibly important to choose the right real estate agent and lender who are going to be there with you every step of the way. If you're looking for a great agent in the Asheville area please reach out, I know some great ones!