DEAR BOB: Because of a job transfer we will be selling our home and moving out of state. The market for home sales is slow in our town now. The real estate agent suggests we carry back a second mortgage, so the buyer can assume our VA first mortgage.

We will get enough cash from the buyer's down payment so we can afford to buy a home in our new town. However, we are concerned about the problems we might have if the buyer doesn't make his monthly payments on time.

If you were in our situation would you carry back a second mortgage, knowing you will be moving out of town? -- Ken K.

DEAR KEN: Yes. Millions of mortgage payments are made to out-of-town lenders every month. Less than 1 percent of those loans ever go into default. However, the best thing that could happen to you if your buyer defaults, you foreclose, and get the house back to sell again for a second profit.

But don't get your hopes up because that rarely happens. If you should have to foreclose, just turn the matter over to a local real estate lawyer.

DEAR BOB: My wife and I were divorced about four years ago. She got the house with its VA mortgage. Shortly after the divorce she became unemployed and quit paying on the mortgage. She lived in the house almost a year before the VA foreclosed. Then she filed bankruptcy to stall the foreclosure sale. Finally, the VA foreclosed and my ex-wife was kicked out of the house.

The VA says they lost about $4,500 after they eventually found a buyer for the house. Now the VA wants me to pay for their loss. Can they do this to me? -- Lloyd L.

DEAR LLOYD: Yes. Unless you were released of liability on the VA mortgage at the time of your divorce, you remained liable to the VA for any loss upon foreclosure of the house. Consult a real estate attorney for further details.

DEAR BOB: Last year we bought our first home. The seller pointed out the fence on one boundary is about three feet on the neighbor's side of the property line, but it had been there when our seller bought the house, so he didn't think it would cause any trouble.

In April the neighbor came to us and says he wants us to remove "our fence" from his property. Since the fence is on his side of the property, it seems to us and our lawyer it is not our job to remove the fence. Do you agree? -- Roger C.

DEAR ROGER: Yes. Since the fence is located on your neighbor's property, you would be trespassing if you remove it. The fence belongs to your neighbor, so if he wants it removed it is up to him to do so. It appears your lawyer gave you correct legal advice. DEAR BOB: From time to time you encourage people to become real estate salespeople. That's a bunch of baloney. Selling real estate is the worst job there is. I tried it for eight months and only grossed about $19,000. Out of that I had to pay my auto expenses, health insurance, income taxes, Social Security tax and other business expenses.

I figure I was lucky to net about $1,500 per month for working at least 60 hours per week and often seven days a week.

At the Christmas party, after a few drinks, my broker told one of the guests she earns over $200,000 per year. But we peasant salespeople are practically starving. Isn't it about time you wise up and tell the truth about what a lousy job selling real estate really is? -- Sherry C.

DEAR SHERRY: I'm sorry you were not successful selling real estate. But at least you tried realty sales and now you know it is not what you enjoy. However, most real estate salespeople enjoy their work very much. If that were not true, the National Association of Realtors would not be the nation's largest trade association with over 700,000 members.

Yes, selling real estate is hard work. But most realty salespeople enjoy their work of helping buyers and sellers. The most successful realty agents are amply rewarded, often earning over $100,000 per year. The top salespeople earn more than $200,000 annually.

Selling real estate is one of the few jobs where there is no limit to how much a person can earn and where salespeople can work as hard or as little as they wish. Unfortunately, getting started in real estate sales is not easy, as you discovered. I wish you well in your new career.

DEAR BOB: I want to buy my first home this summer. I've heard it is wise to offer about 20 percent below the asking price because many sellers inflate their asking price far above what they are willing to accept. Is this a good rule of thumb? -- Thomas P. DEAR THOMAS: No. If you make a purchase offer 20 percent below the asking price, you will insult many home sellers who have realistically set their asking price at or close to their home's fair market value. You might also miss a bargain-priced property with an asking price below its true value because the seller needs a quick sale.

Before making any purchase offer, ask the real estate agent to prepare a written competitive market analysis form for you.

In most cities, the agent need only punch a few buttons on the computer to obtain this information instantly. This form is the same one that was prepared for the seller at the time the home was listed for sale. It contains recent sales prices of comparable nearby houses as well as asking prices of similar neighborhood homes. Only after analyzing this form can you intelligently make a purchase offer on the home you want to buy.

Most sellers will not be insulted if you make an initial offer 5 percent to 10 percent below their asking price. Remember, you can always come up in price, but you can't reduce your offer price. However, if the home is worth its full asking price, don't hesitate to offer close to that price if the local market is very competitive. It would be a shame to lose the home you want just because you insisted on making such a low offer that the seller won't even make a counteroffer.

DEAR BOB: Last weekend we spent about an hour inspecting a home we want to buy. The seller was there with the real estate agent at the Sunday open house. We asked her to list any defects in the house. She itemized minor things like a broken screen door, leaky gutters, one cracked window and some warping of the kitchen floor. But how can I be sure there aren't any hidden serious defects? -- Harry C.

DEAR HARRY: Congratulations on attempting to learn about the home's defects before making your purchase offer. Some states, such as California, now require sellers to disclose in writing all known defects in the home.

In states where such disclosure is not yet required, you should include in your purchase offer a clause such as: "Seller warrants there are no known defects in this home except the broken screen door, leaky gutters, one cracked window and warping of the kitchen floor."

If you find other defects after you buy, then the seller is liable to you for damages if you can prove the seller knew about them. Consult a real estate attorney for further details.

DEAR BOB: Due to a job change we had to sell our home after owning it only about a year so we could move to a new town. But our net loss is around $4,500. Can we deduct this loss on our tax returns? -- Bill W.

DEAR BILL: Sorry, but Uncle Sam doesn't allow you to deduct the loss on the sale of your principal residence. However, he is very quick to tax any home sales profits. Consult your tax adviser for further details.

DEAR BOB: We have a winter home in Florida where we usually live about eight months each year. The rest of the time we spend in our old home, which we have owned about 24 years.

We are thinking of selling this home and moving year-round to our Florida home. However, a friend tells us we won't be able to use that $125,000 "over 55" tax exemption because we don't live there enough time each year. Please clarify if we are eligible. -- Peter W.

DEAR PETER: The over 55 rule of Internal Revenue Code 121 gives you a $125,000 tax exemption on the sale of your principal residence. To qualify you must be 55 or older on the day of the sale, have owned and lived in the principal residence at least three of the five years before the sale and never have used this tax break before.

It appears the home you plan to sell won't qualify if you only live in it four months per year. That means during the last five years you have spent only 20 months living in the home you have owned for 24 years. That is far less than the required three years.

Just because you owned it a long time doesn't mean this is your principal residence. It appears your Florida home now has that honor. For further details, consult your tax adviser.

DEAR BOB: My husband and I are considering buying a home. Recently we noticed several newspaper classified want ads for "lease-options." Please explain how they work and if they are a good deal. -- Julia W.

DEAR JULIA: In my opinion lease-options are the best way to buy and sell homes. But the big obstacle is the real estate agent. Most agents do not like lease-options because they only get part of their sales commission now and they must wait for the balance until the option is exercised.

To illustrate how lease-options work, let me tell you about the most recent one I signed last month as the seller of a $300,000 home. The buyer put up $3,000 to move into the house with $1,500 going to the first month's rent and $1,500 to the nonrefundable consideration for the one-year option. Each month the $1,500 rent is paid on time the tenant gets a $500 rent credit toward the down payment. At the end of 12 months the tenant will have a $6,000 rent credit plus the $1,500 option money or $7,500 total toward the down payment.

Of course, the numbers will be different for each home. As a buyer, I'm sure you can see what a good deal a lease-option can be. But as the seller the lease-option also is a good deal for me. I get to retain all the income tax deductions, but more important, I get top-quality tenants who will treat the home their own. In addition, I can charge higher-than-market rent for the house because lease-option buyers are willing to pay top dollar for these good deals.

DEAR BOB: I am a real estate agent with too many listings of homes for sale and not enough buyers. In recent weeks I've been successful getting some of my sellers to agree to carry back a first or second mortgage.

The results in getting these homes sold have been dramatic. However, I haven't been able to convince my other sellers to help finance their home sales. Any ideas? -- Becky L.

DEAR BECKY: Seller financing at below-market interest rates is making a comeback. As you may recall, this method was very popular during the early 1980s.

Smart real estate agents and their home sellers realize seller financing makes a home stand out from the crowd of tired unsold listings. The best candidates for seller financing are homes being sold by retirees who need extra retirement income. But the worst candidates for seller financing are homes being sold by transferees who need all the cash from their home sale to buy their next residence.

DEAR BOB: We are novice home buyers just starting to look for a home to buy. When we go to a Sunday open houses, some agents tell us the appliances, carpets and drapes are included, but other agents tell us these things are not included. What is the rule on including appliances in the sales price? -- Birk P.

DEAR BIRK: As master negotiator Herb Cohen says, "Everything is negotiable." By the way, his book by that title is an outstanding book to read.

When you see a home you want to buy, just include in your written purchase offer a list of the items you want included, such as stove, refrigerator, carpets, drapes, the cat, the dog, the parakeet, the goldfish, the furniture and whatever else you see that you want.

The worst that can happen is the seller might cross off items, but the best is those items might be included in the sales price.

DEAR BOB: I recently bought some rural land where I hope to build a vacation home this summer. When I was staking out the lot for grading a neighbor stopped over to inform me he has an easement across my lot to get to his adjoining property. There is nothing in my deed about this. I checked with the seller and she says there is no easement. What should I do? -- Lynn T.

DEAR LYNN: Ask the neighbor for his proof of the easement. To be a valid easement, it must be in writing unless the neighbor has met all the conditions for a prescriptive easement. If the easement proof appears to be valid, consult the title insurance company that insured your deed. You did buy an owner's title policy, didn't you?

DEAR BOB: My tenant recently moved out of her apartment. She installed a wall without my permission that had to be removed at a cost of $450, which I deducted from her security deposit. Since it cost me $450 to make the repairs, how do I account for the expense and the forfeited deposit? -- Carter W.

DEAR CARTER: The $450 forfeited deposit is rental income to you and the $450 repair expense is deductible on your income tax return Schedule E. In other words, it is a wash as to income and expense. For more details, consult your tax adviser.

DEAR BOB: Almost two years ago a good friend and I bought a town house together as 50-50 owners. All went well for about a year until we started fighting. He said we should sell the town house or I should buy him out. But I don't want to sell and I can't afford to buy him out. Last month he went to see a lawyer who filed a lawsuit to force the sale of the town house. Is he just trying to blackmail me or can I be forced to sell? -- Nick R.

DEAR NICK: A major drawback of joint tenancy and tenant in common ownership is one co-owner can force the sale of the property in a partition lawsuit. When it is not feasible to physically divide the property between the co-owners, the court can order the property sold and the sales proceeds divided between the co-owners.

Your situation shows why joint tenancy and tenant in common ownership is usually not desirable between co-owners. A better alternative would have been to own the property in a partnership.

The partnership agreement can provide for buy-out agreements, sale of the property and other unexpected events such as where one partner cannot afford to pay for necessary repairs. Although it's too late for you to change your form of joint ownership, others can learn from your mistake.

DEAR BOB: We contracted to buy what we thought was a three-bedroom home. But last week my husband went to city hall to learn what would be required to add a family room and a second bathroom. To his surprise he learned the third bedroom was added illegally without a building permit.

To legalize the addition, the city will require complete inspection and possibly removing some of the walls to check the wiring. Do we have to go ahead with the purchase? -- Shirley T.

DEAR SHIRLEY: If the seller did not disclose the illegal addition, since you learned about it before the sale closed you need not complete the purchase, since the property was misrepresented to you. The seller must refund your earnest money deposit if you elect to cancel the sale.

Another alternative is to require the seller to either reduce the price by the amount of your damages or pay the costs of having the room addition legalized. Home improvements constructed without proper building permits and inspections not only can be dangerous, they also hurt the value and resale potential of the home. Consult a real estate attorney for details.

DEAR BOB: We have contracted to buy a house for $325,000. Everything was going well until the title insurance company discovered a $175 judgment lien from a small claims court recorded against the seller. She claims the lien is not hers, but her name is very unusual, so I think the judgment is correct. Is there any way to close the sale while awaiting settlement of this little claim? -- Walter R.

DEAR WALTER: Yes. It is usually possible to close the sale by having the closing settlement agent hold back an amount double the lien from the sales proceeds until the dispute is settled. Consult the person who will be closing the sale, so a reasonable solution can be agreed upon.

DEAR BOB: In early January we contracted to buy a new home. We got a bargain price and the best- located house because we were the first buyers in a new subdivision. The area has become very popular and the builder has sold out. However, we can't complete our purchase because my employer transferred me out of town.

The house will be completed in a few weeks and I want to assign our purchase contract to a friend who will pay me $2,000. But the home builder refuses to allow us to transfer the contract. It says nothing about the purchase contract not being assignable. What can we do about this mess? -- Charles S.

DEAR CHARLES: Consult a real estate attorney. The general rule is a contract is assignable unless prohibited by its terms or if it is a personal service agreement.

If you contracted to pay all cash for the new house, it shouldn't matter to the builder if the cash comes from you or your friend. However, if the builder is going to carry back financing, such as a second mortgage, then the purchase contract is a personal service agreement that cannot be assigned without the consent of the seller.

DEAR BOB: Instead of buying a single-family house, I am considering buying a two-family duplex where I would live in half and rent the other half to a tenant. Do you think this is a good idea? -- Lindsey R.

DEAR LINDSEY: No. The market value appreciation of duplexes is usually less than for nearby single-family houses. Another problem is you may not want to live so close to your tenants. Readers with questions should write Robert J. Bruss directly at P.O. Box 280038, San Francisco, Calif. 94128.

1990, Tribune Media Services Inc.