Putting thousands down before you even own the home can feel stressful. You want to make a strong offer in Charleston without putting more at risk than you should. You also want to know exactly when you can get that money back if plans change. In this guide, you will learn how earnest money works in South Carolina, how it differs from the due diligence fee, typical amounts in Charleston, and steps to protect your deposit. Let’s dive in.
Earnest money basics in South Carolina
Earnest money is a deposit you make to show a seller you are serious. It is usually held in an escrow or trust account and credited to you at closing. If you follow your contract and the sale goes through, it becomes part of your closing funds.
In South Carolina, your offer often includes two separate items. You will see an earnest money deposit and a due diligence fee. Knowing how they work together is key to protecting your money.
Due diligence fee vs. earnest money
- Due diligence fee: This is paid directly to the seller for your right to inspect and cancel during the due diligence period. It is usually non-refundable after the due diligence period ends, unless the seller breaches.
- Earnest money deposit: This goes into escrow. It is generally refundable if you cancel within contract rules, such as inspection, financing, or appraisal contingencies. If you default, the seller may try to keep it, based on contract language.
Here is the important part. In many Charleston deals, you will pay both. You could lose the due diligence fee even if you get your earnest money back. Plan for both amounts when you budget your offer.
How much to offer in Charleston
There is no fixed amount for earnest money in South Carolina. In Charleston, common ranges depend on price and market conditions.
- Lower-priced homes: Often a flat amount between 1,000 and 5,000 dollars.
- Mid to higher-priced homes: Often 1 to 2 percent of the price. In competitive situations, some buyers offer 2 to 3 percent or more.
For example, on a 300,000 dollar home, 1 percent is 3,000 dollars. At 500,000 dollars, 1 percent is 5,000 dollars and 2 percent is 10,000 dollars. Your number may shift based on neighborhood norms and how competitive the listing is, whether that is historic downtown, West Ashley, or Mount Pleasant.
Consider these factors when sizing your deposit:
- Current competition in the specific Charleston area
- Your price point and cash on hand
- Whether you are paying a non-refundable due diligence fee
- Whether you are waiving or narrowing contingencies
- Seller expectations for the property and submarket
Ask your agent to share recent, comparable offers in the same area so you can match local practice without overcommitting.
When and how to deliver funds
Your contract sets the deadline. Many Charleston contracts require delivery within 3 to 5 business days after ratification, but always follow the exact dates in your signed agreement. The due diligence fee is often due at ratification or within a short window.
Common delivery methods include a personal check, a cashier’s check, or a wire transfer. Wire transfers are fast, but wire fraud is a real risk. Always call a known, verified number for the brokerage or attorney before sending any wire. Never rely on emailed instructions alone.
Ask for a written receipt for your earnest money showing the amount, date, and who is holding it. Keep that receipt with your contract documents.
Who holds your money
In South Carolina, earnest money is usually held by a brokerage in a trust account or in an attorney’s trust account. These accounts follow state rules for client funds and recordkeeping. Your contract will name the escrow holder. If you are unsure, ask your agent to confirm where the funds will be deposited and when.
Refunds, contingencies, and forfeiture
Your ability to get your earnest money back depends on your contract and your timing. Here are the common protections you will see:
- Inspection or due diligence: If you discover issues and cancel within the due diligence period, you typically get the earnest money back. The seller usually keeps the due diligence fee.
- Financing: If you cannot obtain the loan under the terms in your contract and you give timely written notice, you may receive a refund of your earnest money.
- Appraisal: If the home does not appraise for the contract price, and the seller will not adjust, you may cancel per the appraisal clause and typically receive a refund.
If you default for a reason not allowed by the contract, the seller may try to keep your earnest money as damages. Some contracts treat the earnest money as liquidated damages. Others allow the seller to seek additional remedies. Your contract controls, and notice deadlines matter. Missing a deadline can cost you your refund even if the issue fits a contingency.
If there is a dispute over who gets the funds, the money can remain in escrow until you and the seller sign a mutual release or a resolution process, such as mediation, arbitration, or court, is completed.
Real-world Charleston examples
- Example 1: You offer a 2,000 dollar earnest money deposit into the broker’s trust account and a 1,500 dollar due diligence fee to the seller at ratification. During a 10-day due diligence period, an inspection reveals major foundation issues. You cancel within the 10 days. You receive your earnest money back. The seller usually keeps the due diligence fee.
- Example 2: To stand out in a multiple-offer situation, you waive the inspection contingency and post a 15,000 dollar earnest money deposit. If you later try to back out without a contractual reason, you risk forfeiting that larger earnest money deposit.
Step-by-step delivery checklist
- Confirm the escrow holder named in your contract.
- Clarify the amount and deadline for both the earnest money and the due diligence fee.
- Choose your delivery method and verify any wire instructions by phone using known contact numbers.
- Deliver funds before the deadline and get a written receipt.
- Save all documents and calendar every contingency deadline.
Protect your refund rights
Your contract will list exact notice rules for cancellations under inspection, financing, and appraisal. Use written notices and deliver them on time. Ask your agent to confirm the deadlines and the exact language required. When in doubt, send notice early and confirm receipt in writing.
If you are tight on cash, consider a smaller earnest money deposit paired with a strong due diligence timeline, a flexible closing date, or a faster inspection window. If you plan to waive protections in a hot area, increase your deposit only after you understand the risk.
Safety tips for wiring funds
- Call to verify: Use a trusted phone number from your agent or the company website. Do not call numbers in an email with wire instructions.
- Confirm names and account details: Make sure the payee matches the escrow holder named in your contract.
- Send early, then confirm: After sending, call the recipient to confirm receipt and request a written acknowledgment.
What to ask before you offer
Use this quick checklist with your agent or closing attorney:
- Which South Carolina contract form are we using, and does it include a due diligence fee?
- Where exactly will the earnest money be held, and by whom?
- What are the deadlines to deliver the earnest money and the due diligence fee?
- What are the deadlines and notice rules for inspection, financing, and appraisal?
- Does the contract limit remedies to liquidated damages, or allow more?
- What are typical earnest money amounts for this neighborhood today?
Work with a local guide
Every Charleston deal is a little different, and your risk depends on the property, the contract language, and how competitive the market is that week. A trusted, responsive local agent can help you set the right deposit, avoid missed deadlines, and protect your refund rights from day one. If you are weighing how to structure your earnest money and due diligence fee, reach out to Andrew Scherl for clear guidance and hands-on coordination from offer to closing.
FAQs
What is earnest money vs. the due diligence fee in South Carolina?
- Earnest money is an escrow deposit that may be refundable under contract contingencies, while the due diligence fee is paid to the seller for your right to cancel during the due diligence period and is usually non-refundable after that period ends.
How much earnest money is typical in Charleston?
- Many buyers offer 1 to 2 percent of the purchase price, with 2 to 3 percent or more in competitive situations, while lower-priced homes often use flat amounts like 1,000 to 5,000 dollars.
Who holds my earnest money and how do I get it back?
- A brokerage or attorney trust account typically holds it, and you receive a refund by following the contract’s termination steps and notice deadlines, which may include a mutual release or dispute process.
Is earnest money the same as my down payment?
- No, earnest money is credited toward your closing funds but it is separate from the lender-required down payment and closing costs.
Is wiring earnest money safe for Charleston purchases?
- Wiring is common and fast, but you should always verify instructions by calling a known number for the brokerage or attorney and get a written receipt after sending.
