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    Why the Due Diligence Fee Is Such an Important Part of a Home Sale

    The due diligence fee that homebuyers now have to pay is beneficial for both sides of the transaction—here’s why.

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    What is the due diligence fee?

    Earnest money (which is put into an escrow account as part of the overall purchase price) used to be the only fee homebuyers had to pay during the due diligence period, but now they also have to pay due diligence fee, which goes directly to the homeowner. Once this check is cashed, it can’t be refunded.

    Why was this additional fee added? In the old days, if you just deposited earnest money and you wanted to back out of a purchase, that would cause a lot of trouble. Not only would you have to argue over why you were backing out, but you also had to decide who got the earnest money. Oftentimes, situations like this ended up in court.


    It no longer matters why you back out
    of a purchase, but rather when you back out.


    Now, you don’t have to worry about this type of thing if you do decide to back out of the purchase during the due diligence period. You’ll lose your due diligence fee, but you get your earnest money back. If you back out after the due diligence period, you lose both fees to the seller.

    In short, it no longer matters why you back out of a purchase, but rather when you back out. This is a good thing because it makes matters easier for buyers and sellers to deal with. As a buyer, it also gives you the confidence to make an offer you’re not 100% sure about without having a lot of money at risk.

    If you have any questions about this or any other real estate-related topic, don’t hesitate to call or email me. I’d love to speak with you.

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