DEAR BOB: As a real estate broker, I commend you for encouraging home buyers to use seller financing whenever possible. But when that isn't feasible, here's another idea which works for me to help people buy a home.

Recently, I had a listing on a home worth $110,000. But it only had a first mortgage of about $42,000 at 8 1/2 percent interest. The seller needed as least $40,000 cash to use to buy a larger home. It would be very unlikely a buyer with $40,000 cash would purchase this home.

So I went to the lender (a savings and loan association) to negotiate. I emphasized that if this home wasn't sold, the lender would continue to be stuck with the 8 1/2 percent loan. loan. I got the lender to agree to loan $80,000 at 11 1/2 percent interest and a one-point loan fee. This made it easy to sell the home, with a 15,000 down payment; the seller took back a $15,000 second mortgage. Everyone is happy, especially the agent, Larry L. Washington.

DEAR LARRY: Thank you for sharing another technique for selling homes in today's slow market. Your creative thinking, plus the lender's greed, benefited everyone.

The lender, I'm sure you realize, is earning more than 11 1/2 percent (today's mortgage interest rates for new mortgage are in the 13 to 14 percent range). On the $38,000 new money loaned, the lender earns 11 1/2 percent. But on the old $42,000, the lender raised the yield by 3 percent. That's about $1,260 extra per year. Adding $1,260 plus the $4,370 annual earnings on the $38,000 new money totals $5,630. This is a 14.8 percent yield on the $38,000 lender's advance.

This is a variation of the wrap-around mortgage principle. Your buyer probably couldn't get an 11 1/2 percent interest rate loan elsewhere. The lender gave that "bargain rate" to yield 14.8 percent on its new funds loaned. Everyone got what they wanted out of the transaction.

DEAR BOB: We bought our home a few years ago when homes were going up in value almost 20 percent per year. I read in the newspaper they are now going up only about 10 to 12 percent annually. Our son wants to buy a home. Do you think buying a small one is still a good investment? Mrs. L. P., College Park.

DEAR MRS. L.P9: Definitely yes. The higher the inflation rate, the less rapidly real estate appreciates in market value. If the inflation rate drops in 1981, you can expect home values to appreciate more rapidly. Since most home rise in value at or near the inflation rate, they are still the best inflation protection for most people.