Key Takeaways
-
The "Pay to Play" Fee: The Due Diligence Fee is a check written directly to the seller. It is non-refundable, even if you walk away during the inspection period.
-
Good Faith Money: Earnest Money sits in an escrow account. If you terminate the contract properly during your due diligence period, you get this back.
-
Strategic Amounts: In a competitive market (like Mt. Pleasant), a higher Due Diligence fee ($1k–$5k) can win a bidding war, but it carries higher risk.
-
The 5 PM Rule: Deadlines in SC contracts are strict. Missing your termination deadline by one minute can cost you thousands.
If you are moving to Charleston from a state like New York or Ohio, you are probably used to a simple "deposit" when you buy a house. South Carolina does it differently. And if you aren't careful, it can cost you thousands of dollars before you even own the keys.
In our contracts, we often split the "upfront money" into two buckets: Earnest Money and the Due Diligence Fee. Confusing them is the #1 mistake I see out-of-state buyers make.
1. The Due Diligence Fee: "The Option Money" Think of this as purchasing time.
-
Who gets it: The Seller. But not Immediately.
-
Is it refundable? Let's clarify this - the Due Diligence Fee is ONLY payable if you cancel the contract before the expiration of the Due Diligence Period (usually 7-10 business days).
-
What it buys you and the seller: For you it is a show of strength - that you are VERY certain you will proceed with the purchase even after inspections. For the seller it is a degree of certainty that their house is sold...and if NOT they get some extra cash to compensate them for the time off the market.
-
The Risk: If you commit to a $2,000 Due Diligence Fee and then find out the house has termites, you can walk away... but that $2,000 stays with the seller.
2. Earnest Money: "The Good Faith Deposit"
-
Who gets it: The Closing Attorney (held in a trust account).
-
Is it refundable? YES, if you terminate the contract properly before the Due Diligence deadline expires.
-
The Strategy: This shows you have "skin in the game." A standard amount is 1-2% of the purchase price. But it's not uncommon to see 3-5% for a serious buyer.
3. How to Structure a Winning Offer in 2026 In today's "Normalizing" market, we don't need to be as reckless as we were in 2022.
-
The "Safe" Play: Offer a lower Due Diligence fee ($500-$1,000) and higher Earnest Money. This protects your cash if the inspection reveals a deal-breaker.
-
The "Aggressive" Play: If you are fighting for a dream home in the Old Village, a high Due Diligence fee ($5,000+) signals to the seller that you are serious and unlikely to flake over minor repairs.
Neighborhood Watch: Who Has the Leverage?
-
Downtown Charleston: High Stakes. Because inspections here often reveal scary things (structural issues, old plumbing), keep your Due Diligence fee lower so you can walk away cheaply if the inspection is a disaster. Earnest money though needs to be significant to show you are committed.
-
Mount Pleasant: Seller's Market. Sellers expect significant Due Diligence fees ($1K+) because they know their home will sell to someone else if you back out.
-
North Charleston/Summerville: Buyer's Market. You can often negotiate a $0 or very low Due Diligence fee here ($500 or less), especially on New Construction where its uncommon.
-
West Ashley: Balanced. A $500 Due Diligence fee is standard and fair for 1960s ranches.
FAQ
Q: Does the money count toward the house price? A: Yes and No! Earnest Money is credited back to you at closing as part of your down payment. A Due Diligence Fee is not held as a deposit and therefore wouldn't count towards the purchase.
Q: What happens if I miss the Due Diligence deadline? A: With a good agent, you should never "miss" this deadline as its a critical timeline step in the buying process. If you proceed past the Due Diligence deadline, your Earnest Money becomes non-refundable (except for specific contingencies like financing/appraisal, CL100, and any other agreed upon contingencies).
Q: Do I need an attorney? A: Yes. South Carolina is an "Attorney State." You cannot close a deal here with just a title company.
By: Dustin Guthrie, Realtor
📞 Call/Text (843) 697-7757
📧 [email protected]
📸 Instagram @dustin_guthrie_realtor
