Following just after "you're right," my next two favorite words to hear are "escrow closed."

Ask anyone who's sold a house. The journey between accepting an offer and closing the escrow is akin to carrying live explosives across a mine field. Everything can blow up at any step: A loan can fall through, an appraisal fall short, the roof cave in while the home inspector is up there checking it, a lien against the house turns up in a title search, a discovery the house is on Indian burial ground.

If an escrow falls apart, it's back to square one for the sellers. So it's important for them to understand what the term "in escrow" (or "under contract," as they say in some states) really means. Translation: Buckle up, light the prayer candle, and don't count your chickens ... because this house deal can slide all over the icy pond before it gets to the other shore, if ever.

After a buyer s offer is accepted, hurdles such as buyer financing and the appraiser s estimate of how much the property is worth are beyond a sellers

That's why I didn't write this column until after close of the 30-day escrow on my parents' home in Orange, which I sold on their behalf April 9. If I have learned anything the hard way, it's that nothing makes you look like a fool faster than running ahead of yourself on the rope bridge of presumption.

"Getting an offer is important, but equally important is evaluating the offer so (the deal) doesn't fall apart," said my agent and friend Bill Wood, of Yorba Linda, who headed off problems before they could derail the deal. After our escrow closed, I asked Wood, who has 30 years' experience buying and selling houses, how many residential properties fall out of escrow. His answer: as many as 1 in 5, meaning 80 percent of houses close, though often with some turbulence.

Here are the hurdles sellers must clear, a sampling of what can go wrong and the strategies Wood uses to minimize the risks:

Loan approval. Buyer financing problems are the No. 1 reason house sales don't close, amounting to half of all failed escrows, said Wood. Each of the five offers we got on my parents' home came with letters from the direct lender saying that the buyer was preapproved for the loan. That's pretty standard. As added insurance, however, once Wood and I narrowed the offers to three, Wood requested copies of the buyers' bank statements, credit reports and employment and income verifications.

Appraisal. In today's market, getting a home appraised for the purchase price is a big problem, since housing values are rising faster than appraisals, which rely on past sales, said Wood. Banks base loans on either the purchase price or the appraised value, whichever is lower. So, if a buyer is taking out an 80 percent loan, the bank will loan no more than 80 percent of the lower number. If the house appraisal is low, the buyer must come up with more cash or the seller must reduce the price. If neither happens, the deal is dead. Low appraisals kill about 40 percent of escrows that fail, Wood said. He talked with our buyer's lender, to find out whether the appraisal would be in the ballpark. Then he asked the buyer to agree that, if the appraisal came in at anywhere between the purchase price and $10,000 less, the buyer would pay the difference. Fortunately, the home was appraised at purchase price.

Home inspection. Buyers should have inspections done within a week of opening escrow so the parties can address any issues early in the process. Deals rarely fall apart over a home's physical condition, said Wood, but buyers can use inspectors' reports to get sellers to lower their price, make repairs or both. Smart sellers will want to have the house in good repair before listing it. Or they can get their own inspection done before the house is listed, and then say it is being sold "as is." "The buyer can obtain a second inspection, which won't likely be too different," said Wood, "but having the inspection up front protects sellers from buyers who want to nitpick."

Termite inspection. This should also be done early to find out whether extermination or dry-rot repairs will be necessary. If damage is found, that rarely impacts an escrow, but can impact the profit on the sale. Because we expected to find some termite damage in our 50-year-old wooded house, our agent got the buyer to agree that, for any termite repairs, we would pay the first $1,000, and the buyer would pay the rest. Total repair charges were $1,245.

Title clearance. A property's title lists all its owners and any liens against it. A house has to be clear of liens to transfer to a new owner, and all owners must agree to the sale. Title issues rarely break deals, but can slow them down. To head off such issues, Wood checks a home's title for problems before listing a property.

Contingencies. Many buyers make offers contingent upon another transaction, such as completion of the sale of their own home. "If we have a buyer in escrow on his house, I would take a hard look at how solid that deal was," said Wood. "Not too many contingent offers are being accepted in this market. I'm not sure I'd accept one."
