I’ve had programmable thermostats in the past. Most of them are hard to program, requiring lots of button mashing with the manual in one hand. The last ones we had would sometimes inexplicably reset themselves to the factory settings. Manufacturer knows best!

Unboxing a Nest is a very Apple experience. The packaging is lovely, designed to unveil your brand new $250 thermostat in the prettiest way possible. It has been called “the iPod of Thermostats.” Alright, but that’s not the nifty part.

First and foremost, it learns from the way you live your life. It will figure out that you like it a little warmer on cold winter afternoons, or that you like it cooler at night — and adjust the temperature automatically. It will in a matter of weeks figure out whether you are out all day or whether you leave around noon. You can of course correct it if it’s wrong.

Second, it has built in energy saving features that will reduce your energy bills. Not only will it adjust itself to you, if you pay attention it will help you save even more. According to their latest press release, an average family can save $1000 a year. That’s 4 times what the device itself costs.

Very few people are mentioning that multiple Nests can communicate with one another. This is a huge plus for any household with multiple HVAC units! They will work together to keep the whole house one temperature. This is why I think the Nest is a must for any larger home.

More people have pointed out that your Nest will actually connect to WiFi. What does that mean to you? It means you can control your thermostat from anyplace that you have an internet connection, including your smart phone! Want to turn on the AC or the heat when you leave the office for the day? No problem. Sitting at the airport and wonder if you remembered to turn off the air conditioner? Just log in and do it remotely. This makes it a must-have item for anybody who travels often or anybody with a vacation home.

Finally, it’s simple to use. The controls are intuitive. The menus use plain English. I have no problem saying it’s a great product and a huge step forward in programmable thermostats.

This item is cross-posted at my other site.

The News: Everybody is noticing that inventory is down and prices are up, both locally and in many other metropolitan areas. However, our market is still dominated by distressed property such as foreclosures and short sales.

Interest rates still remain at historic lows, now averaging 3.83% for a 30 year conventional fixed rate mortgage. Needless to say, this is fueling interest in buying a home right now.  Remember that although many experts think low rates will remain with us through 2014, I would not be surprised for them to be a full percentage point higher by this time next year.

Bank of America is offering thousands of unlucky homeowners the opportunity to reduce their mortgage principal! If you get one of those letters, it is legit and you should probably look into it. However, be aware that the program is considered by some to be mostly a “publicity stunt.” Remember that B of A is still having unforgivable accounting and legal “oversights.”

Available Listings: There are 4462 single family homes (down), with a median price of $195,000 (up), $89 per square foot (up). In addition, there are 517 condominiums (down), with a median price of $63,900 (up), $65 per square foot (up) and 326 townhomes (down) with a median price of $89,950 (down), $67 per square foot (unch).

Distressed Properties: Of available listings, there are 1465 short sales (down) and 698 bank-owned (REO, foreclosures, & “repos”) properties (down). Median price for a short sale is $140,000 (up); median price on a bank-owned home is $119,900 (down). All short sale listings should be considered at risk of becoming bank owned properties whether they are available or contingent. The 3143 non-distressed properties for sale (down) had a median price of $220,000 (up). While many of the non-distressed properties are traditional sellers, many others were purchased fairly recently as short sale or bank owned, and then renovated by investors.

Single Family Home Prices: Of available listings, 114 under $50,000; 636 between $50,000-$100,000; 1618 between $100,000-$200,000; 1258 between $200,000-$400,000; 428 between $400,000-$700,000; 165 between $700,000-$1,000,000; and 293 over $1,000,000.

Condo and Townhome Prices: Of available listings, 245 under $50,000; 334 between $50,000-$100,000; 196 between $100,000-$200,000; 55 between $200,000-$400,000; 15 between $400,000-$700,000; 2 between $700,000-$1,000,000; and 1 over $1,000,000. For technical reasons, these figures do not include high-rise communities.

Contingent and Pending Listings: Of the 16085 properties in the process of being purchased (down), 13565 are single family homes with median price of $122,000 (up); 1530 are condominiums with median price of $50,000 (unch); 989 are townhomes with a median price of $75,000 (unch). Final negotiated sales prices are confidential until closing. Of the total, 11812 are short sale, 2186 are foreclosed, and 2087 are traditional sales. While the bank-owned and traditional sales are likely to close within 30-45 days, no time frame is available for unapproved short sales.

Recently Sold: 621 properties closed this week, 3912 in the last 30 days, and 16462 so far this year. For properties closed in the last 30 days, median time on market was 36 days (down). Median sales price was $116,500 (up); median list price was $119,000 (up). For single family homes, median sales price was $128,220 (down), for condos $52,000 (up), and for townhomes $71,500 (up). Short sales accounted for 1181 of the total, there were 1458 bank owned properties, and 1298 non-distressed sales.

Rentals: 5252 homes, townhomes, and condos were available for rent in the Valley in the MLS system (up). Median square footage of these units is 1500 and median rent is $1095. There are 1061 contingent leases waiting to be signed and 2652 leases signed in the last 30 days (up) with median rent of $1100 and median square footage of 1562.

Need more information or help with your real estate needs? Call me today at 702-727-7842 or email bmagnus@bridgetmagnus.com. Based on information from the Greater Las Vegas Association of REALTORS Multiple Listing Service for the date specified above. This article was written and copyright by Bridget Magnus, and is her sole property.

An earnest money deposit shows the seller that a buyer is serious about purchasing a property. When the transaction is finalized, the funds are put toward the buyer’s down payment. If the deal falls through, the buyer may not be able to reclaim the deposit. Typically, if the seller terminates the deal, the earnest money will be returned to the buyer. When the buyer is responsible for retracting the offer, the seller will usually be awarded the money.

Typically, the amount of the deposit is related to the purchase amount. For a home under $100,000, a deposit of $1000 is completely reasonable. For a $500,000 home, it will be more. It should be an amount that the buyer will think twice about walking away from the transaction! Currently Fannie Mae requires 10% EMD on cash purchases of Homepath homes (this is subject to change).

Once a purchase offer is accepted, the deposit should in almost all cases go to the escrow company — a third party that will make sure that both the buyer and seller get what they deserve. They will hold on to the money and make sure that all the accounting on the transaction is correct.

Now, most reasonable purchase offers have contingencies: a provision for the buyer to get his deposit back if certain things are not as expected. The GLVAR purchase offer, for example, has a mortgage contingency, an inspection contingency, an appraisal contingency, and an HOA resale package contingency. That  means if the buyer can’t get a mortgage, or terrible things turn up on inspection, or the appraisal comes in low, or there are unacceptable things in the HOA rules, the buyer can cancel the contract and get that EMD back. Some of these contingencies can be waived. For example, a cash buyer doesn’t need a mortgage and can waive appraisal. I think any buyer would be foolish to waive inspection. The receipt of the HOA resale package cannot be waived in most circumstances under state law.

Now, let’s point out what it is not: It’s not a write up fee, a payment to write a purchase offer, an up-front commission to the buyers agent, a bribe, a way to cheat a buyer. This is a legit deposit, and I wish more Realtors and resources for home buyers did a better job of explaining it.

Investopedia correctly points out that the deposit will be applied towards the downpayment and closing costs. However, it is important to note that in the rare case that you qualify for a “Zero Down” program (such as a VA loan), you will still need to put down an Earnest Money Deposit. You can apply it to closing costs, you can often get the money back at closing. In the immortal words of Robert Heinlein, “There ain’t no such thing as a free lunch.”

The News: I do love to start with fun stuff, so let’s get rolling with 21 things to do in Vegas for under $21! And it doesn’t include the shoes at the Cosmo, Fremont Street, or the various neon displays. Who doesn’t love fun things at low prices?

Even though foreclosures are down, they are still an important part of the Vegas housing market. So here’s an interesting article on foreclosures nationwide and why some states have different problems than others.

Trulia has noticed what I’m seeing on the ground: listing prices for homes are going up, even when you account for the mix of price levels.

And finally, mortgage interest rates have hit yet another all time low: the 30 year fixed rate averages 3.84%. Many experts say that rates will remain low for another year or two “because the Fed has committed to low rates.” What these experts fail to understand is that the Fed doesn’t control mortgage rates. I hope to explain in detail next week.

Available Listings: There are 4725 single family homes (down), with a median price of $189,900 (up), $87 per square foot (up). In addition, there are 553 condominiums (down), with a median price of $60,000 (down), $62 per square foot (unch) and 353 townhomes (up) with a median price of $90,000 (up), $67 per square foot (unch).

Distressed Properties: Of available listings, there are 1641 short sales (down) and 787 bank-owned (REO, foreclosures, & “repos”) properties (down). Median price for a short sale is $139,999 (up); median price on a bank-owned home is $119,950 (up). All short sale listings should be considered at risk of becoming bank owned properties whether they are available or contingent. The 3203 non-distressed properties for sale (up) had a median price of $219,900 (up). While many of the non-distressed properties are traditional sellers, many others were purchased fairly recently as short sale or bank owned, and then renovated by investors.

Single Family Home Prices: Of available listings, 129 under $50,000; 711 between $50,000-$100,000; 1737 between $100,000-$200,000; 1311 between $200,000-$400,000; 427 between $400,000-$700,000; 167 between $700,000-$1,000,000; and 294 over $1,000,000.

Condo and Townhome Prices: Of available listings, 281 under $50,000; 351 between $50,000-$100,000; 209 between $100,000-$200,000; 57 between $200,000-$400,000; 14 between $400,000-$700,000; 1 between $700,000-$1,000,000; and 1 over $1,000,000. For technical reasons, these figures do not include high-rise communities.

Contingent and Pending Listings: Of the 15777 properties in the process of being purchased (down), 13332 are single family homes with median price of $120,760 (up); 1487 are condominiums with median price of $50,000 (unch); 959 are townhomes with a median price of $75,000 (unch). Final negotiated sales prices are confidential until closing. Of the total, 11626 are short sale, 2166 are foreclosed, and 1984 are traditional sales. While the bank-owned and traditional sales are likely to close within 30-45 days, no time frame is available for unapproved short sales.

Recently Sold: 1017 properties closed this week, 3936 in the last 30 days, and 15746 so far this year. For properties closed in the last 30 days, median time on market was 37 days (down). Median sales price was $115,000 (up); median list price was $116,000 (up). For single family homes, median sales price was $129,900 (up), for condos $51,000 (unch), and for townhomes $69,725 (up). Short sales accounted for 1181 of the total, there were 1458 bank owned properties, and 1298 non-distressed sales.

Rentals: 5165 homes, townhomes, and condos were available for rent in the Valley in the MLS system (up). Median square footage of these units is 1502 and median rent is $1095. There are 1040 contingent leases waiting to be signed and 2530 leases signed in the last 30 days (down) with median rent of $1095 and median square footage of 1563.

Need more information or help with your real estate needs? Call me today at 702-727-7842 or email bmagnus@bridgetmagnus.com. Based on information from the Greater Las Vegas Association of REALTORS Multiple Listing Service for the date specified above. This article was written and copyright by Bridget Magnus, and is her sole property.

The folks at Calculated Risk, on the other hand, look at the very same data and see an upwards slope! He notes that some markets — like, say, Las Vegas — are seeing bidding wars.

Just in case this isn’t confusing enough, here’s an economist who thinks that both the “bulls” and the “bears” are correct. Edit: here’s more.

Personally, I think that prices in some metro areas probably have bottomed, some haven’t, and it’s very hard to make all the data fit one trend.

Will the mortgage officer really process it: One of the questions I ask every new mortgage person I talk to is whether they will handle loans in this price range. In my experience, no reliable mortgage person will. It’s simply too much work for too little commission — and too little chance that it will close. I have dealt with some mortgage people from the “big banks” that say it’s no problem, but something bad comes up every single time. And why is that?

It comes down to condition: I’ve tried to make these transactions work in the past. Really, I have. Usually in the last week before closing, appraisal conditions come back. You probably knew that your mortgage company won’t commit to lending you the money until after the appraisal. They want to make sure the place is really worth that much. But maybe you didn’t know that the appraisal can come back with a list of things that must be fixed before closing! Sometimes these things are simple, like a new smoke detector. Sometimes they are big and expensive, like replacing broken windows or replacing the roof! Since most properties in this price range are either bank owned or short sale, odds are very good that the seller will not make any repairs prior to closing. This leaves the buyer with a choice: pay to fix the problems before closing (if it doesn’t close, you lose the money, if your workers break something, you’re liable); put a lot of money in escrow towards making repairs (usually 2-3 times the estimated repair cost); or walk away.

And a bonus half a reason, The HUD Condo List: it shouldn’t be any shock that there are more cheap condos than cheap houses. Many lenders won’t lend to purchase in a community that isn’t on the “HUD list” of FHA approved condos. There are very strict criteria to get on this list. As of today, there’s only 283 communities in the entire state of Nevada that qualify, 192 of them in Las Vegas.

It never feels good to tell someone that their dream of owning a home just isn’t going to work out right now. However, sometimes it is the honest thing to do.

Summary: I would not have thought it possible, but we have fewer than 6000 available units: only 5890 residential properties are listed in the MLS for sale. Needless to say, median prices are up in every property type. Even short sales are moving fast with multiple offers in many cases. Part of the reason that median prices are on the rise is that the inventory of low price properties is drying up; both investor and owner-occupant buyers have snapped them up as quickly as possible, moving the median upwards in the process. Median time on market is going down for sold properties. No surprise, we have a strong number of closings going into month end. Expect another good number next week.

The News: Let’s start with fun stuff. The giant shoes at the Cosmopolitan are out for repair. They’ll be back soon, ready for thousands of people to climb inside for a quick picture.

It’s been a “the sky is falling” sort of week in real estate news. Over half of metropolitan areas saw an increase in foreclosures. However, Vegas foreclosures are down 26% — that’s right, down — knocking us down to #8 in the nation. How nice it is to not be #1 anymore.

Of course you’ve probably heard that the Case-Shiller index showed another drop in home prices, or did it? However, it turns out that part of the reason is how Case-Shiller works. Some price indices show a price rise. Housing is a lot more complicated than it looks.

Meanwhile, interest rates are new record lows and the number of properties under contract is up — a great sign for the next few months.

Available Listings: There are 4961 single family homes (down), with a median price of $186,300 (up), $86 per square foot (up). In addition, there are 578 condominiums (unch), with a median price of $60,840 (down), $62 per square foot (up) and 350 townhomes (down) with a median price of $89,950 (up), $67 per square foot (up).

Distressed Properties: Of available listings, there are 1780 short sales (down) and 837 bank-owned (REO, foreclosures, & “repos”) properties (down). Median price for a short sale is $139,900 (up); median price on a bank-owned home is $115,500 (up). All short sale listings should be considered at risk of becoming bank owned properties whether they are available or contingent. The 3270 non-distressed properties for sale (down) had a median price of $215,950 (unch). While many of the non-distressed properties are traditional sellers, many others were purchased fairly recently as short sale or bank owned, and then renovated by investors.

Single Family Home Prices: Of available listings, 130 under $50,000; 810 between $50,000-$100,000; 1807 between $100,000-$200,000; 1369 between $200,000-$400,000; 430 between $400,000-$700,000; 175 between $700,000-$1,000,000; and 301 over $1,000,000.

Condo and Townhome Prices: Of available listings, 284 under $50,000; 381 between $50,000-$100,000; 203 between $100,000-$200,000; 58 between $200,000-$400,000; 12 between $400,000-$700,000; 1 between $700,000-$1,000,000; and 1 over $1,000,000. For technical reasons, these figures do not include high-rise communities.

Contingent and Pending Listings: Of the 15926 properties in the process of being purchased (up), 13452 are single family homes with median price of $120,000 (unch); 1492 are condominiums with median price of $50,000 (unch); 982 are townhomes with a median price of $75,000 (unch). Final negotiated sales prices are confidential until closing. Of the total, 11600 are short sale, 2313 are foreclosed, and 2012 are traditional sales. While the bank-owned and traditional sales are likely to close within 30-45 days, no time frame is available for unapproved short sales.

Recently Sold: 851 properties closed this week, 4041 in the last 30 days, and 14595 so far this year. For properties closed in the last 30 days, median time on market was 38 days (down). Median sales price was $112,750 (up); median list price was $114,900 (unch). For single family homes, median sales price was $127,000 (up), for condos $51,000 (unch), and for townhomes $69,050 (up). Short sales accounted for 1114 of the total, there were 1598 bank owned properties, and 1330 non-distressed sales.

Rentals: 5153 homes, townhomes, and condos were available for rent in the Valley in the MLS system (up). Median square footage of these units is 1502 and median rent is $1095. There are 1186 contingent leases waiting to be signed and 2649 leases signed in the last 30 days (up) with median rent of $1095 and median square footage of 1538.

Need more information or help with your real estate needs? Call me today at 702-727-7842 or email bmagnus@bridgetmagnus.com. Based on information from the Greater Las Vegas Association of REALTORS Multiple Listing Service for the date specified above. This article was written and copyright by Bridget Magnus, and is her sole property.

Let’s talk about some of the reasons why foreclosures are really down.

Delinquent Mortgages Are Down: In fact, delinquency hasn’t been this low since 2008. In other words, more people are paying their mortgages on time! While economic experts still think this number is way too high, the fact is that fewer delinquent mortgages quite naturally leads to fewer foreclosures, which in turn leads to fewer bank owned properties available. Part of the reason that delinquency is so low is that mortgages are taking less of a bite out of a typical paycheck (and don’t forget to look at the end of that article, which points out that “Prices for bottom-tier properties have improved since 2011….”).

Banks are under Pressure to Complete Short Sales and Modifications: The foreclosure fraud settlement included guidelines designed to shorten the time needed to approve a short sale, and recent changes at Freddie Mac and Fannie Mae are in line with that.  The timeline is even smaller than the one required (but rarely followed) under Nevada law! The settlement also demanded some mortgage modifications — including principal reduction. All this is over and above Federal efforts to directly encourage refinancing and short sales outside of the settlement. This paragraph is why I think doom-and-gloom theories about shadow inventory are nothing more than Chicken Little screaming about how the sky is falling.

Banks are under Scrutiny: The robosigning mess left an environment where everybody is watching the banks: customers, consumer watchdogs, the press, lawmakers, courts, Attorneys General, even the Consumer Fraud Task Force. They want to be very careful not to do something that might bring any of these watchers crashing down on them.

Banks Must Answer to Wall Street Too: By keeping homes out of foreclosure, they don’t have to admit that they will never, ever see the money that was lent out. Bank of America reported a huge profit last week, and they could not have done that if they were honest about their loan portfolio.

And finally….

It’s an Election Year: When this was pointed out to me, I thought it was beyond cynical. But there is a germ of truth here. The banks want politicians to work for them, not against them. A rash of new foreclosures would give Congress a quick way to improve their polling numbers by doing something. Come to think of it, 2008 was an election year too.

So here’s my prediction: short sales will continue to pick up this year, Congress won’t have time to extend the tax breaks for short sales before they adjourn at Christmas (they may well remember to fix this come January), a bunch of short sales will fall through early in 2013, there will be a slight rise in foreclosures in the first half of 2013, however there will be continued pressure to do anything but foreclose. Bookmark this one so you can see how far off I am this time next year.

Summary: Last year we had 14708 available properties, but now we only have 6207. Yikes! At least the rate of inventory dropping is slowing (the number of available condos did actually rise slightly). And remember, interest rates in mid-April of 2011 were 4.91%! Not surprisingly, there is upwards price pressure. Even the supply of short sales is down, although like other parts of the country there are more short sales than foreclosures available. Traditional sellers are starting to list, lured out by good weather and improved prices. The number of short sales under contract is up sharply from last year, but read the news below to see why I’m not worried about it. Now how’s this for odd coincidences: Median price on sold property is almost exactly what it was a year ago. Granted, we had a period where it was lower, but I consider this a good sign.

The News: Short sale timelines will be getting shorter on any property with a mortgage owned by Fannie Mae or Freddie Mac — and that’s over half of all mortgages here in the states. Bank of America is leading the way, approving more short sales than any other servicer or lender. Great news for anybody involved in a short sale! And experts are starting to agree with me that this is the Year of the Short Sale!

Existing home sales were down in March compared to February. However, inventory is down sharply from last year nationwide — which explains light sales in March despite being a longer month than February.

Available Listings: There are 5223 single family homes (down), with a median price of $178,900 (up), $84 per square foot (up). In addition, there are 578 condominiums (up), with a median price of $58,950 (down), $60 per square foot (down) and 404 townhomes (down) with a median price of $89,776 (down), $66 per square foot (up). Last year we had 12188 single family homes with a median price of $135,000 and 2519  condominiums and townhomes with a median price of $64,900.

Distressed Properties: Of available listings, there are 1981 short sales (down) and 941 bank-owned (REO, foreclosures, & “repos”) properties (down). Median price for a short sale is $130,000 (unch); median price on a bank-owned home is $115,000 (down). All short sale listings should be considered at risk of becoming bank owned properties whether they are available or contingent. The 3284 non-distressed properties for sale (up) had a median price of $210,000 (unch). While many of the non-distressed properties are traditional sellers, many others were purchased fairly recently as short sale or bank owned, and then renovated by investors. A year ago it was 7160 shorts, 2801 REO, and 4746 classic listings.

Single Family Home Prices: Of available listings, 131 under $50,000; 902 between $50,000-$100,000; 1957 between $100,000-$200,000; 1384 between $200,000-$400,000; 429 between $400,000-$700,000; 175 between $700,000-$1,000,000; and 292 over $1,000,000. April 2011′s numbers were 377 under $50,000; 3291 between $50,000-$100,000; 5532 between $100,000-$200,000; 1996 between $200,000-$400,000; 559 between $400,000-$700,000; 217 between $700,000-$1,000,000; and 378 over $1,000,000.

Condo and Townhome Prices: Of available listings, 306 under $50,000; 393 between $50,000-$100,000; 219 between $100,000-$200,000; 59 between $200,000-$400,000; 12 between $400,000-$700,000; 1 between $700,000-$1,000,000; and 1 over $1,000,000. For technical reasons, these figures do not include high-rise communities. Last year it was 807 under $50,000; 1298 between $50,000-$100,000; 394 between $100,000-$200,000; 59 between $200,000-$400,000; 10 between $400,000-$700,000; 2 between $700,000-$1,000,000; and 2 over $1,000,000.

Contingent and Pending Listings: Of the 15089 properties in the process of being purchased (down), 13370 are single family homes with median price of $120,000 (unch); 1498 are condominiums with median price of $50,000 (unch); 941 are townhomes with a median price of $75,000 (up). Final negotiated sales prices are confidential until closing. Of the total, 11444 are short sale, 2401 are foreclosed, and 1965 are traditional sales. While the bank-owned and traditional sales are likely to close within 30-45 days, no time frame is available for unapproved short sales. That compares to 13191 a year ago, 8187 of them short sales.

Recently Sold: 784 properties closed this week, 4060 in the last 30 days, and 13602 so far this year. For properties closed in the last 30 days, median time on market was 41 days (down). Median sales price was $112,500 (unch); median list price was $114,900 (up). For single family homes, median sales price was $126,250 (up), for condos $51,000 (down), and for townhomes $68,500 (down). Short sales accounted for 1086 of the total, there were 1647 bank owned properties, and 1327 non-distressed sales. Last April we had 3841 recent sales; median sales price was $112,500 and median list price was $114,900.

Rentals: 5224 homes, townhomes, and condos were available for rent in the Valley in the MLS system (up). Median square footage of these units is 1506 and median rent is $1095. There are 1117 contingent leases waiting to be signed and 2627 leases signed in the last 30 days (up) with median rent of $1095 and median square footage of 1523. A year ago there were 3756 available rentals and 2211 new leases. The rental segment has really picked up in the last year as investors have been more active.

Need more information or help with your real estate needs? Call me today at 702-727-7842 or email bmagnus@bridgetmagnus.com. Based on information from the Greater Las Vegas Association of REALTORS Multiple Listing Service for the date specified above. This article was written and copyright by Bridget Magnus, and is her sole property.

Bank Addendum has unacceptable terms: If you are buying a foreclosure, the bank that owns the property will send you a big addendum with terms that over-ride your local paperwork. This document is written by a team of lawyers and is not negotiable. Read it carefully! If the buyer can’t live with the terms, the only thing to do is walk away.

Inspection turns up problems: This is why buyers should always do a property inspection. Sometimes the problems are much worse than expected. As a buyer, you can ask for reasonable repairs in most cases. However, most bank owned properties are sold “as is, no repairs prior to close.” In the case of a short sale, the seller might not have the money to make repairs. The buyer might have the ability to negotiate a lower price based on the inspection report, but it is unlikely on foreclosures and short sales. A traditional seller hit with a bad inspection report has the option of making reasonable repairs or offering a lower price. This is a great reason for sellers to pay for a property inspection up front — the opportunity to make repairs before somebody else finds a problem, or adjust the price up front.

Short Sale Approval Doesn’t Work Out: After months of looking at the seller’s financial papers, the bank can come up with one of 3 replies: yes, no, or new terms. Since the bank will be losing tens or hundreds of thousands of dollars, they do get the last word. If the bank comes up with a higher price or other terms that are not acceptable to the buyer or the seller, the only option is to end the transaction. What might be unacceptable to the seller? No release of deficiency or a big out of pocket payment at closing! What might be unacceptable to the buyer? Higher closing costs, a higher purchase price, or an unreasonably short time in which to close. If the bank’s terms just won’t work for either party, the only answer is to cancel.

Title Problems: These days, it’s increasingly common to have a problem caught by the nice folks at title: a forgotten lien, delinquent HOA payments, sometimes even a seller who doesn’t actually own the property! Only the seller can fix these problems, and it does take time. The seller should probably cancel the transaction, clear the problem, and put the property back on the market.

Appraisal Comes Back Low: The buyer’s mortgage company is not going to let the buyer borrow more than the property is worth. That leaves 3 options: the buyer can come up with the difference between the purchase price and the appraised value  in cash (not always possible), the buyer and seller can negotiate a lower price close to or even at the appraised value, or the buyer can walk away. This leaves the seller in a bad position, since that appraisal is likely to come up again.

New Loan Conditions based on Appraisal: The appraiser may notice something that must be fixed — at least in the mind of the lender! Sometimes these items are minor, like a couple more smoke detectors. Sometimes they are major, like a new roof! The loan will not fund without the required repairs. A traditional seller can be pressured to make repairs. When the seller can’t or won’t make repairs, the buyer has a problem. I will never recommend that a buyer make repairs on a property he doesn’t own. But usually, a buyer can either put money into escrow towards repairs to be made after close, or in some cases get a home improvement loan for the express purpose of making those repairs after close!

HOA Rules or Fees Unacceptable: Most states require the seller to make sure the buyer gets a copy of the HOA documents before close. The buyer should have an opportunity to read things like the community policies and budget before closing. Sometimes, things pop up in those documents that just won’t work. Perhaps the buyer planned to rent out the property and the HOA doesn’t allow rentals. Perhaps the buyer hoped to paint in new colors or renovate the landscape in a way that isn’t allowed. The buyer has the right to back out and there’s not really much the seller can do.

Loan Problems: I find this to be the most common item. Sometimes a buyer does something without thinking that it might effect their mortgage: open a line of credit at a furniture store to buy stuff for the new place; have a garage sale for all the stuff they aren’t moving and deposit a large sum of cash in the bank. Most loan problems can be overcome, but they take time. Buyers should ask their mortgage professional up front what things they should avoid in escrow, and keep very good financial records in case a problem comes up. Again, not much the seller can do.

Unexpected delays: Sometimes things just take longer than they should. No matter which side is to “blame,” the only answer is an extension addendum. This basically says “I know we agreed to close on this date, but we will close by this later date instead.” Be sure to ask for as much time as you need up front — and within reason! — because most people are reluctant to grant a second extension.

I hope this is helpful. Good luck!