Two Deposits, Two Very Different Roles
South Carolina real estate contracts commonly involve two upfront deposits from the buyer: due diligence money and earnest money. They travel together in the paperwork, they show up on the same closing statement, and they get confused constantly — especially by buyers relocating from states that only use one.
Getting the difference right matters because these two deposits protect the buyer and seller in different ways, and one of them can be non-refundable from the moment it is delivered.
What Is Earnest Money in South Carolina?
Earnest money is the traditional good-faith deposit a buyer places when going under contract on a Grand Strand home. It signals the buyer is serious and gives the seller something to hold onto while the property is off the market.
Key facts on earnest money:
- Typically 1 percent of the purchase price on the Grand Strand, sometimes more on higher-priced homes
- Held by an escrow agent — usually the listing brokerage or the closing attorney
- Fully refundable to the buyer if a contingency in the contract is not met (financing, inspection, appraisal, etc.)
- Applied toward the buyer's cash-to-close at closing
- Forfeited to the seller only when the buyer defaults outside of an active contingency
Earnest money is, in short, protected — as long as the buyer keeps the contract alive and meets each contingency deadline.
What Is Due Diligence Money?
Due diligence money is a separate deposit that pays the seller for taking the home off the market during the buyer's inspection and evaluation period. Unlike earnest money, it is a fee for the seller's time and market risk.
Key facts on due diligence money:
- Amount is negotiable — commonly a few hundred to a few thousand dollars in the Myrtle Beach market
- Delivered directly to the seller, not held in escrow
- Non-refundable from the moment it changes hands, in almost every case
- Credited toward the buyer's cash-to-close if the deal reaches closing
- Kept by the seller if the buyer walks away for any reason — including inside the due diligence window
Due diligence money is essentially the price of the buyer's option to walk away during the inspection period without losing earnest money.
How They Work Together in a South Carolina Contract
A typical Grand Strand contract flow:
- Offer accepted, buyer delivers both due diligence money (to seller) and earnest money (to escrow) within the deadline in the contract
- Due diligence period begins — buyer conducts South Carolina due diligence, inspections, insurance quotes, HOA document review, and any other evaluation
- If the buyer terminates during the due diligence period, earnest money is refunded but due diligence money is retained by the seller
- If the buyer proceeds past the due diligence deadline, both deposits typically become non-refundable outside of financing or appraisal issues
- At closing, both deposits are credited toward the buyer's cash to close
Why the Amounts Matter
The math of these two deposits is a negotiation lever, not a fixed number. A buyer who wants to look competitive against multiple offers may increase due diligence money to signal commitment. A seller who wants to reduce the risk of the home sitting off the market may push for higher due diligence money. Buyers unfamiliar with South Carolina practice sometimes propose $0 due diligence money — sellers on the Grand Strand often reject that outright.
The tradeoffs are real:
- Higher due diligence money = stronger offer, but more money at risk if the buyer walks
- Lower due diligence money = better buyer protection, but a weaker offer in a competitive scenario
- Earnest money amount signals seriousness but is refundable during contingencies, so it costs the buyer less risk than due diligence money
Common Buyer Mistakes on the Grand Strand
Buyers relocating to Myrtle Beach — see our overview of what buyers should know when purchasing on the Grand Strand — routinely make these mistakes:
- Treating due diligence money as refundable because it feels like earnest money
- Missing the deadline to deliver either deposit, giving the seller the right to terminate
- Waiving inspection or the due diligence period entirely in a hot-market offer without understanding what they lost — see our due diligence checklist for buying a Myrtle Beach condo for the specifics on condo evaluations
- Forgetting that due diligence money goes directly to the seller, not into escrow, so wire fraud protections differ
Frequently Asked Questions
Is due diligence money refundable in South Carolina?
No, in almost every case due diligence money is non-refundable from the moment the seller receives it. That is the tradeoff — the buyer gains a defined inspection and evaluation window during which they can walk away without losing earnest money, and the seller is compensated for holding the home off the market. Verify the exact wording of your contract with your agent and closing attorney.
Is earnest money refundable in South Carolina?
Yes, in most cases. Earnest money is refundable to the buyer as long as the buyer terminates the contract within an active contingency — for example, during the due diligence period, or after a financing or appraisal contingency is not met. Once contingencies expire and the buyer defaults for another reason, earnest money is typically forfeited to the seller.
Who holds due diligence money in a Grand Strand transaction?
Due diligence money is delivered directly to the seller, not held in escrow. Earnest money is different — it is held in a trust account by the listing brokerage or closing attorney. That is why buyers should confirm the seller's exact payment instructions before wiring due diligence money.
Do all offers on Myrtle Beach homes include due diligence money?
Not always, but on the Grand Strand it is a standard practice, and many sellers expect it. Skipping it can weaken an offer in a competitive scenario. Your agent should walk through the local market norm before you write the offer.
Key Takeaways
Earnest money is your good-faith deposit, held in escrow, refundable during active contingencies, and applied to closing. Due diligence money is a separate payment made directly to the seller in exchange for the right to inspect and evaluate the property — it is non-refundable in most cases and also credited toward closing if the sale proceeds. Both deposits protect the transaction, but they protect different things. Understanding that difference before you sign is what keeps South Carolina buyers from writing checks they didn't mean to write.
About Greg Harrelson
Greg Harrelson is a seasoned Realtor® with more than 30 years of experience serving the Myrtle Beach and Grand Strand markets. As the founder of Century 21 The Harrelson Group, Greg has built his career helping buyers, sellers, and investors achieve success in every corner of the coastal Carolina real estate market. His expertise spans residential homes, investment properties, land development, and coastal condos. Known for his deep local knowledge, innovative marketing strategies, and commitment to personal service, Greg consistently helps clients reach their real estate goals while navigating the ever-changing market with confidence and precision.
