Due Diligence Fee / Deposit

What in the world is a Due Diligence deposit and do I HAVE to do it?

Due Diligence is a NON-REFUNDABLE deposit. If and when you close on the home, it works as a deposit toward the cost of the home. If you terminate, the seller keeps that deposit.

I know it sounds scary, especially for seasoned buyers from other states where it doesn’t exist.

Timing - It is delivered to the seller usually via personal check or cashier’s check at time of contract. The seller is OWED the deposit at time of contract whether it has officially been delivered or not. There is no Due Diligence owed if the offer is never accepted.

Amount - The amounts can vary and I’ve seen everything from a couple hundred dollars to over $150,000! This really depends on many things - the market, the price of the home, the demand of the home, the urgency and motivation of both parties, etc. If we know there are multiple offers on the table, we need to write a compelling offer with desirable terms to get picked as the best. Keep in mind that the highest sales price doesn’t always win and it’s important to strategize a great offer that will be a win for you as the client but will be compelling to the seller.

You do not have to offer a due diligence deposit as part of your offer just keep in mind that the seller is unlikely to take their home off the market and accept a contract without some sort of “skin in the game”. No Due Diligence can come across as an unmotivated buyer.

The offer is made up of many terms and Due Diligence is just one of them and whether an offer is accepted or countered really depends on the needs of the seller. If a seller is also purchasing a home and spending money on inspections, moving expenses, and starting to pack they’re likely going to want to see a Due Diligence deposit.

As always, call or text with any questions you may have on the topic!