Earnest Money vs. Due Diligence Fee: Kennesaw Buyer Guide
What's the Difference Between Earnest Money and a Due Diligence Fee in Georgia?
In a Georgia home purchase, the due diligence fee is money you pay directly to the seller when your offer is accepted, and in most cases it's non-refundable the moment you sign. Earnest money goes into an escrow account instead, and it comes back to you if you cancel the contract for a valid reason during your due diligence period. Buyers in Kennesaw and Marietta mix these two up all the time, and that mix-up can cost real money if you don't understand it before you write an offer.
TL;DR
- The due diligence fee (often $100–$1,000 on homes in this price range) goes straight to the seller and is typically non-refundable once it's paid.
- Earnest money (commonly 1%–2% of the purchase price, roughly $4,000–$9,000 on a $450,000 Kennesaw home) sits in escrow and comes back to you if you terminate properly during due diligence.
- Most North Atlanta contracts give buyers a due diligence period of 7 to 14 days — confirm the exact number before you sign anything.
- If you miss the due diligence deadline and then back out without a contingency, you can lose both the fee and your earnest money.
- New construction contracts in Acworth and Kennesaw often shorten or remove the due diligence period entirely.
Buying in Kennesaw: Earnest Money and Due Diligence Fee, Explained
If you're house hunting in Kennesaw, the GAR (Georgia Association of REALTORS®) contract you sign will almost always include both an earnest money deposit and a due diligence fee. They look similar on paper, but they work in completely different ways.
Earnest money is a good-faith deposit that gets held by a brokerage, title company, or closing attorney in a trust account. It's not the seller's money yet, it's just sitting there as proof you're serious. If your deal closes, it's credited toward your down payment or closing costs. If you terminate the contract for a reason your contract allows, like during due diligence, it gets returned to you.
The due diligence fee is different. It's a separate, often smaller payment that goes directly to the seller, usually within a day or two of the contract being signed. Sellers treat it as compensation for taking their home off the market and giving you time to inspect it. Most of the time, once that check clears, it's the seller's money no matter what happens next, even if you walk away during due diligence for a legitimate reason.
Here's where buyers get tripped up: terminating during due diligence usually gets you your earnest money back, but it almost never gets you your due diligence fee back. Both protections exist in the same contract, but only one of them is designed to come back to you.
Marietta Contracts: How Much Buyers Typically Put Down
In Marietta, where home prices currently sit in the $450,000 range, earnest money deposits typically land between 1% and 2% of the purchase price. On a $450,000 home, that's roughly $4,500 to $9,000. In a competitive multiple-offer situation, some buyers go higher to signal they're serious, though a stronger earnest money deposit doesn't make your offer's due diligence terms any less real.
Due diligence fees, by contrast, tend to be much smaller, often somewhere between $100 and $1,000, though it varies by price point and how many offers a seller is fielding. In a market where sellers are getting multiple offers, you'll sometimes see buyers offer a larger due diligence fee as a way to stand out, since it signals they're unlikely to walk away over something minor.
Your specific numbers depend on your home's price, the seller's expectations, and how competitive that particular listing is. That's where it helps to have someone who's negotiated these terms in this exact market walk through your offer with you before you submit it.
Georgia's Due Diligence Period: What Happens If You Walk Away
Georgia's due diligence period is the window, written into your contract as a specific number of days, during which you can have the home inspected, request repairs through an Amendment to Address Concerns, and terminate the contract for any reason or no reason at all. Most contracts in the North Atlanta area set this period at 7 to 14 days, though it's fully negotiable and can run shorter in a fast-moving market.
Here's how the two deposits behave during that window:
- Terminate during due diligence, in writing, before the deadline: Your earnest money is returned to you. Your due diligence fee stays with the seller.
- Let the due diligence period expire without terminating: You're now committed to the contract under its remaining terms. If you back out after this point without another valid contingency (financing, appraisal, or title issues, for example), you risk losing your earnest money too.
- Negotiate repairs via an Amendment to Address Concerns: If the seller won't agree to repairs or credits you've requested, you typically still have the right to terminate before the due diligence deadline and get your earnest money back.
We've written in more detail about how Georgia's due diligence period works for Kennesaw buyers, including what a typical inspection-to-termination timeline looks like day by day.
West Cobb Buyers: How to Negotiate These Terms Before You Sign
Before you submit an offer on a home in Acworth or anywhere else in West Cobb, walk through these questions with your agent:
- How many days of due diligence am I actually getting? Seven days is tight if you need to schedule a general inspection, a sewer scope, and possibly a structural or HVAC specialist. Fourteen gives you breathing room, but in a competitive offer, a shorter period can make your offer more attractive.
- What due diligence fee am I comfortable losing? Since this money is essentially gone once you sign, only offer what you'd be okay forfeiting if you decide the home isn't right for you after all.
- Is this a resale or new construction? New construction contracts often work differently. Builders frequently use their own contract forms, sometimes with no due diligence period at all, or one that only applies to specific items like the structural walkthrough. We've covered how new construction terms compare to resale contracts in Kennesaw and Acworth if you're weighing both options.
- What's my exit plan if financing falls through after due diligence ends? A financing contingency that extends past your due diligence deadline can be the difference between getting your earnest money back and not.
None of these terms are one-size-fits-all. Your specific number depends on your home's condition, location, and timing, and the only way to know for sure is to run the numbers with someone who knows this market. You can also browse all of West Cobb's communities at masoudpour.com to get a feel for how contract norms vary block by block.
Frequently Asked Questions
What's the difference between earnest money and a due diligence fee?
Earnest money is a refundable good-faith deposit held in escrow that's returned to you if you terminate properly during due diligence. The due diligence fee is a smaller, separate payment made directly to the seller that's typically non-refundable once paid, regardless of why you later terminate.
How much should I offer for earnest money and a due diligence fee on a home in Kennesaw or Marietta?
Earnest money commonly runs 1% to 2% of the purchase price, while due diligence fees are usually $100 to $1,000 depending on the price point and how competitive the listing is. If you're comparing offers in Acworth or elsewhere in West Cobb, these numbers can shift based on local conditions, so it helps to check current norms before you write your offer.
Is the due diligence period different for new construction homes?
Often, yes. Builders frequently use their own contracts, and many either shorten the due diligence period significantly or remove it in favor of milestone-based walkthroughs. We break this down in our guide to new construction versus resale contracts in Kennesaw and Acworth.
What happens to my due diligence fee if I terminate the contract?
In almost all cases, the due diligence fee stays with the seller once it's been paid, even if you terminate for a legitimate reason during your due diligence period. Your earnest money is the deposit that's designed to come back to you. If you have questions about how this applies to a specific contract, you can reach out through masoudpour.com and we'll walk through it with you.
What This Means for Your Next Offer
Earnest money and the due diligence fee aren't interchangeable, and confusing them can leave you surprised at the closing table or out money you expected back. Before you write an offer on a home in Kennesaw, it's worth understanding exactly what each deposit protects and what it doesn't.
Whether you're buying your first home or your fifth, schedule a consultation with me, Robert Masoudpour, and I'll walk through your specific contract terms with you before you sign anything. Schedule a 15-minute consultation
