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First-Time Buyers

Is a Georgia Due Diligence Fee the Same as Earnest Money?

Georgia buyers are often told to offer a "due diligence fee" on top of earnest money. The two payments go to different people and follow different refund rules. Here is how each one works under the standard Georgia contract.

By Mortgage in Georgia Editorial··AI-assisted
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Say you are a first-time buyer in Georgia and your agent tells you to put in an offer with earnest money and a "due diligence fee" on top. Many buyers figure these are two names for one deposit. They are not. One payment goes straight to the seller and you generally do not get it back. The other is held in trust, and you can often recover it if you cancel the right way. That is the due diligence fee vs earnest money Georgia confusion in short, and getting it wrong can cost you real money if you walk away from a house.

This guide covers what each payment is, who holds it, and what happens to both in the most common cancellation scenarios.

What is a due diligence fee in Georgia?

Short answer: The standard Georgia REALTORS (GAR) Purchase and Sale Agreement does not call it a due diligence fee. It calls it option money: a payment to the seller in exchange for your right to cancel during the Due Diligence Period.

A close still life of a pen resting across a blurred, unsigned contract page beside a folded bill on a wood table.

"Due Diligence Fee" is the term North Carolina REALTORS use for their state's version of this payment, which they describe as "typically nonrefundable." Plenty of Georgia agents use the North Carolina name loosely, so you will hear "due diligence fee," "option fee," and "option money" for the same thing. When you read your Georgia contract, look for "option money."

A Greater Atlanta broker, Dana Sparks of Maximum One, quoted the GAR form's language in a 2015 contract-tips post: "Buyer: (1) has paid Seller $10.00 in nonrefundable option money." According to that version of the form, any additional option money the parties agree to "shall become nonrefundable when the Agreement becomes binding and shall not be applied toward the purchase price at closing."

Two cautions here. First, that is the 2015-era wording, and the GAR form is revised regularly. Read the option money section in the version you actually sign, including whether any extra amount is credited toward your price. Second, the same post advises agents to write "$0.00" rather than "N/A" in the additional option money blank, so it is clear the term was negotiated. If your blank is empty or says "N/A," ask why.

How much option money do Georgia buyers pay?

No official data tracks this. One Atlanta agent, Kristen D. Johnson, writes that competitive Atlanta deals often see due diligence or option fees of $1,000 to $5,000 or more, "paid directly to the seller at contract and is nonrefundable from the moment it's paid." Treat that as one agent's view of a busy metro market. It is not a statewide norm, and in Savannah, Macon, Augusta, or a slower county the number may be much lower or nothing beyond the $10.

What is earnest money in Georgia?

Short answer: Earnest money is a good-faith deposit held by a neutral "Holder," usually a broker or closing attorney, in a trust account. It does not go to the seller when you sign.

Paralegal Daniel C. Collins, in a February 2026 explainer on the 2026 GAR form (F201), notes that earnest money is paid to the Holder and that checks and ACH transfers must come from U.S. financial institutions.

When a broker holds the money, state rules apply. Georgia Real Estate Commission Rule 520-1-.08 requires brokers to "promptly deposit" trust funds in a federally insured account designated as a trust account. The same rule limits when a broker may pay that money out, which matters if you cancel (more on that below).

Option money vs earnest money at a glance

| | Option money ("due diligence fee") | Earnest money | | --- | --- | --- | | Who receives it | The seller, directly | A Holder (broker or closing attorney), in trust | | What it pays for | Your right to cancel during the Due Diligence Period | Shows good faith; security for the seller if you default | | Refundable if you cancel properly during due diligence? | No, under the form language quoted above | Yes | | Applied to the price at closing? | Not in the 2015 wording quoted above; check your contract | Check your contract for how it is credited |

How does the due diligence period work in Georgia?

Short answer: It is a negotiated window in which the buyer can cancel for any reason, or no reason, by written notice and get the earnest money back. Georgia law does not set the length.

Attorney Chris Pahl of Georgia Title & Escrow Company writes that during the period the buyer may "terminate the contract for ANY reason or no reason at all, with a full refund of earnest money." Maximum One's post makes the same point and adds that only the buyer, not the seller, holds this right.

The length is up to you and the seller. Perigon Legal Services notes that "Georgia does not mandate a specific length by law." Perigon says most contracts set 7 to 10 days and that competitive markets may cut it to 3 to 5 days. Pahl puts the typical range at 10 to 14 days. The sources differ, which tells you this really is negotiable.

Count carefully. According to Ratifyly (June 2026), "The current GAR contract counts calendar days, and it counts them from the Binding Agreement Date treated as day zero." Weekends count. If your Binding Agreement Date is a Thursday and you have 10 days, day 1 is Friday.

Cancel in writing. Perigon says termination is by written notice to the seller or the seller's agent before the deadline, and that missing it "even by one day" typically means the buyer forfeits the earnest money.

What happens to each payment if you back out?

| Scenario | Option money | Earnest money | | --- | --- | --- | | You send proper written notice inside the Due Diligence Period | Seller keeps it | Refunded to you | | You miss the deadline, even by a day | Seller keeps it | At risk of forfeiture (Perigon) | | Due diligence has ended, but a contingency still applies (for example financing, if your contract includes one) | Seller keeps it | May be recoverable if you exit under that contingency's terms | | You default with no contingency to rely on | Seller keeps it | Collins says the seller's "sole remedy is retention of the earnest money as liquidated damages" |

After due diligence expires, Pahl writes, "the buyer's right to terminate becomes much narrower." Perigon notes that "other contingencies, such as financing or appraisal, may still apply depending on the contract terms." Don't assume you have them. Johnson writes that a Georgia financing contingency "covers true loan denial" and does not cover a rate increase or a job change. Whether you have a financing contingency at all, and what it says, depends on your contract.

"Liquidated damages" means an amount agreed in advance. In Collins' reading of the 2026 form, if the buyer defaults, the seller keeps the earnest money as compensation.

How do you get earnest money back in Georgia?

Short answer: Sending a termination notice ends the contract, but it does not automatically release your deposit. When a broker holds the money, they can pay it out only in the situations state rules allow.

Under Rule 520-1-.08(3)(b), a broker may disburse trust funds only:

  • when an offer is rejected;

  • when an offer is withdrawn before acceptance;

  • at closing;

  • on a written agreement, separate from the contract, signed by all parties with an interest in the funds;

  • on filing an interpleader action (asking a court to decide who gets the money);

  • on a court order; or

  • "upon a reasonable interpretation of the contract which directed the broker to deposit the funds."

If a broker pays out money that not everyone has expressly agreed to, the rule says "the broker must immediately notify all parties in writing of the disbursal."

In practice, a clean cancellation during due diligence usually comes with a signed release from both sides. If the seller disputes your right to the money, Collins writes that the Holder cannot split disputed funds on its own and may interplead them into court. That takes time, so getting the notice right the first time matters.

Negotiating these two payments as a first-time buyer

Sellers in competitive situations may weigh both numbers. Here is how to think about the trade-off:

A person sits thoughtfully alone at a kitchen table with coffee and blurred paperwork nearby in morning light.

  • Option money is a cost you pay either way. Assume you will not get it back, whether you close or cancel. Under the 2015 wording quoted above, it was not credited toward the price at closing. Only offer an amount you can afford to lose.

  • Earnest money is at risk mainly if you miss deadlines or default. A larger deposit may look stronger to a seller, but it is more money tied up and more you could lose if something goes wrong after due diligence.

  • A short due diligence window is a concession too. Make sure the period gives you time to schedule an inspection, get repair quotes, and see where your lender is on appraisal and underwriting. A cheap option payment with a 3-day window can cost you more than a slightly larger payment with time to do the work.

Checklist before you sign

  • How much option money, written as a dollar amount ("$0.00" if none beyond the $10), and whether your version of the contract applies it to the price.

  • The earnest money amount and the named Holder.

  • The exact calendar date the Due Diligence Period ends, counting the Binding Agreement Date as day zero.

  • How and to whom termination notice must be delivered.

  • Which contingencies, such as financing or appraisal, survive after due diligence, and what each one actually covers.

  • Any questions for your closing attorney, asked before you sign rather than after.

This article explains general contract mechanics, not legal advice for your deal. Contract versions change, and your agreement controls. A Georgia real estate attorney can review your specific terms.

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Frequently asked questions

Is a due diligence fee refundable in Georgia?

Generally no. The GAR contract calls this payment option money and pays it directly to the seller, and the form language a Georgia broker quoted in 2015 describes it as nonrefundable once the agreement is binding. If you cancel properly during due diligence, you get your earnest money back but not the option money.

Do you get earnest money back if you cancel during due diligence in Georgia?

Yes, if you deliver proper written notice before the Due Diligence Period ends. Georgia attorneys describe this as a full earnest money refund for cancelling for any reason or no reason at all.

How long is the due diligence period in Georgia?

Georgia law does not set a length, so it is negotiated in each contract. Perigon Legal says most contracts set 7 to 10 days, while attorney Chris Pahl puts the typical range at 10 to 14 days, and competitive markets may go shorter.

Who holds earnest money in Georgia?

A Holder named in the contract, usually a broker or closing attorney. Brokers must keep it in a federally insured trust account under Georgia Real Estate Commission Rule 520-1-.08 and may pay it out only in the situations that rule lists.

What happens to earnest money if you back out after due diligence in Georgia?

You can usually exit only through a remaining contingency, such as financing if your contract includes one. Otherwise your earnest money is at risk, and one 2026 explainer says the seller's sole remedy under the GAR form is keeping it as liquidated damages.

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