You will get change ordered to death if your instructions fail or you forgot something...

If you break the contract because the PM fails to perform their basic tasks, then you should be able to break the agreement without penalty.

On the other hand, I would not let deal fail over such a small thing.

It seems to me from my internet research that I can't touch the deposit unless he fails to pay rent or causes damage to the property.2- Is it wise to touch the deposit before he leaves?

Joe I see this as highly regional.. when we were flipping in Dallas almost all appraisals came in low and we had to negotiate.. it was frustrating and since the homes were FHA buyers they no had any more money to make up the delta.. and with the uber high tax's there you just have to let them go and make less or break even on the flip.. we just were not efficient enough to compete there.In Oregon and Charleston were we do true NEW construction for retail in the 450 to 2 million price points.. we have not had one appraisal come in low.. they come in at our sales number.. and this last community we built.. the exact same house we built the year before on the same size lots we sold for 75k more.. and they still appraised.. that's good appraisers keeping up with rising markets.. in Texas it was not that way the appraiser were not tracking the rising market like they should have.For the average homeowner to use this strategy could lead to some frustration of making offers paying for inspections and appraisals and then trying to negotiate down only to have a sale fail and be out 1k or more and the time involved..

If we come in at 110 and no one else bids (which they most likely won't), will auction.com skip over us since the reserve had been disclosed and we failed to meet it?

Faith is what you stepped out on, and Faith doesn't fail! 

That's why I like to always leave "failed deals" with a good impression (no rough bridge-burning negotiations) and let them know that if they change their mind here's my card. 

I do, actually - BUT where I fail is I haven't gotten permission to communicate with them further.  

Fail to file on time the Feds will make that decision for you.What to do today.