Earnest money is a refundable deposit that serves as collateral to enforce the terms of the contract. If the buyer violates the contract, they lose that money. If the deal goes through, it goes toward their down payment and/or closing costs. Earnest money deposits are usually between 1-2% of the home’s purchase price, but can be much higher in more competitive situations. The due diligence fee, on the other hand, protects the seller in case you back out of the deal for a protected (or non-protected) reason as a result of inspection reports or other information gained during the due diligence period. This way, the seller gets something (the due diligence fee) even if you are able to legally recoup your earnest money. The due diligence fee is only refundable if the seller backs out of the deal. Due diligence fees aren’t mandatory, or even allowed, in every market. And if you’re waiving any due diligence contingencies or paying cash and buying as is, it obviously won’t apply. But if applicable, the due diligence fee is typically in addition to the earnest money deposit. The typical due diligence fee is between $500-$2,000, although it can be much lower. Like earnest money, the due diligence fee is negotiable and credited to the down payment or closing costs if the deal goes through. Your agent will be able to let you know if a due diligence fee might apply in your situation.