DEAR BOB: Several months ago when we put our home on the market for sale we followed your advice and interviewed three agents before listing our home for sale with the best one. She came highly recommended, even by one of the other agents we interviewed. Her references were impeccable. However, we neglected to insist on a written marketing plan for our house.

Because of the slowdown in home sales in our city her brokerage has cut back on its advertising and promotion and our home was barely advertised.

When it became apparent we had chosen the wrong agent, after 60 days of virtually no promotion and much hostility from the agent, we canceled the listing.

We listed our home with one of the other agents we interviewed. He gave us a written marketing plan and showed us examples of how his firm sells houses even in a slow market. After about three weeks he brought us a purchase offer that we accepted.

Why don't you include on your listing checklist a requirement the agent provide the home seller with a written marketing plan for the home? -- Lillie L. DEAR LILLIE: Thank you for that valuable suggestion. The best realty agents specify in writing how they plan to sell the home. As you probably know, advertising, signs and open houses often are not enough.

Interestingly, I recently heard of a major brokerage chain in Miami which recommends its home sellers obtain a professional appraisal of the house before a listing will be accepted. If a truly objective appraisal is made, this sounds like a good idea, providing the appraiser does not "low ball" the valuation to get the house listed for sale at a low price which is easy to sell. DEAR BOB: I have been a real estate broker for almost 15 years. During that time I have enjoyed many great sales years and some lean years, too.

As you know, real estate is a cyclical business. I thoroughly enjoy it, but I am constantly amazed at my fellow realty agents who, when listing a home for sale, fail to insist the seller obtain a termite inspection and professional inspection report, so we cooperating agents can know this information when we show a house to prospective buyers. I tell my sellers these inspections will avoid surprises and smooth the sale of the home.

Have you been able to figure out why so many home sellers and their realty agents don't obtain these inspections at the time of listing? -- Ben S. DEAR BEN: I also find it shocking when realty agents don't have the termite and professional inspection reports available to show to prospective buyers. Such reports can be excellent sales tools. But their absence can be big drawbacks.

For example, just a few weeks ago I was being shown a fixer-upper house by the listing agent and the selling agent. When I asked about a termite inspection, the listing agent (who is a top-volume agent) replied when he sold the house to the seller four years ago there weren't any termites. I was amazed at his lack of professionalism.

Thank you for pointing out a major weakness in the sales presentation of most homes. Perhaps we can start a campaign to get home sellers and their agents to obtain termite and professional inspection reports at the time of listing and have them available to show to prospective buyers. Such reports help avoid surprises, so the parties know the estimated cost of necessary repairs. DEAR BOB: My wife and I plan to sell our home and a rental house we also own. I am eligible for the over 55 rule $125,000-home-sale-tax exemption on our residence which we want to sell now. But my wife is 53. Could she move into the rental house, live there for three years, sell it when she is 56 and claim the $125,000 exemption on that house? -- James N. DEAR JAMES: No. When you use your once-per-lifetime, $125,000-home-sale-tax exemption on the sale of your personal residence, that means both you and your wife become ineligible to ever use that tax break again even though your wife is not yet 55.

However, the rental house can qualify for an Internal Revenue Code 1031 tax-deferred exchange for another "like kind" investment or business property such as a rental house, apartment building, warehouse, or commercial building. Consult your tax adviser for full details. DEAR BOB: About two years ago I sold my home and carried back a $23,000 second mortgage for the buyer, who faithfully pays me $230 each month. But now I want to sell this mortgage as I need some cash to pay bills. It has a 12 percent interest rate. I have advertised it for sale several times in the newspaper, but nobody will pay me the $23,000 balance. I'm told the balance is worth much less, since investors would have to wait 13 more years when the balloon payment comes due. But I think a 12 percent interest rate is pretty good. How can I avoid being swindled? -- Evelyn C. DEAR EVELYN: Your $23,000 mortgage is not worth $23,000. I doubt you would pay $23,000 today for the privilege of receiving $23,000 in 13 years. The 12 percent interest rate is good, but not enough to satisfy most mortgage investors who want higher yields of at least 15 to 20 percent on their invested dollars. For this reason, mortgages sell at discounts. DEAR BOB: My wife and I bought a vacant lot in a very desirable neighborhood. It was being sold by an estate. We presumed we would be able to build a house on it because it is a single-family neighborhood. However, when we contacted an architect about designing a house, she said the lot is below the minimum size for a house.

We applied for a zoning variance, but were turned down. Our lawyer says we can appeal to the courts, but that can be very expensive. We were thinking of suing the estate for not telling us the lot is unbuildable. But our lawyer refuses to take the case. He says the estate cannot be held liable for non-disclosure of the lot's small size. Do you think we should appeal? -- Bailey H. DEAR BAILEY: Your situation is a classic example of why buyers of vacant land should first check to learn what can be built on the property. Apparently there was a very good reason why that lot remained vacant in an otherwise built-up neighborhood.

However, I wouldn't give up. If your lot has no practical use, and the city refuses to grant a zoning variance, you may have a damage claim against the city. I suggest you find a lawyer who is experienced in zoning matters. The local realty board can give you the name of their lawyer who probably will either be interested in taking your case or can recommend another lawyer who specializes in zoning litigation. DEAR BOB: We thought we sold our home and were congratulating ourselves and the realty agents. Then about a week before the scheduled closing date the buyer informed us she changed her mind and doesn't want to buy.

When we threatened to sue her for damages she pointed to the liquidated damages clause of the purchase contract that limits damages to her $1,000 earnest money deposit, which she is willing to forfeit. When we agreed to liquidated damages we had no idea the buyer could back out and only have to forfeit $1,000. Can we sue her for our extra carrying costs and any lost profit if we sell to another buyer for less? -- Julio H. DEAR JULIO: A liquidated damage clause in a real estate purchase contract limits the amount of damages the buyer will lose if the buyer defaults. Since you agreed to the $1,000 liquidated damages, I'm afraid that is the limit on your damages. Consult your attorney for more details. DEAR BOB: Recently I was watching Cable News Network, which had a report on the insurance problems for the people whose homes burned in the Santa Barbara fire. Some of the people said their homes were way underinsured and some owners had no insurance, but a few owners said they had something called guaranteed replacement cost insurance.

As my home is in a rural area where it would burn to the ground before the fire department could arrive, what type of insurance would be best for me? -- Claude N. DEAR CLAUDE: Consult your insurance agent. In my opinion the best homeowner insurance is a guaranteed replacement cost policy. Most of these policies periodically adjust to cover increasing replacement costs. With such a policy, even if the replacement cost exceeds the policy limit the insurance company must pay to rebuild your home.

Incidentally, this type of policy also may save you money. For example, the mortgage on my home is much larger than the estimated replacement cost of my home. The reason is much of the value of my property is in the land that would not be destroyed in a fire. The lender is satisfied and I'm happy, too, because I don't have to insure for the full amount of the mortgage. DEAR BOB: My father has a terminal illness. He could die tomorrow or he might linger many months or even years. I am managing his financial affairs as he is unable to.

His major assets include several apartment buildings, as well as his home which is now vacant because he moved to a convalescent hospital. He wants to deed these properties to me now, but I am not sure if this is a good idea. What do you suggest? -- George R. DEAR GEORGE: Consult your tax adviser. Usually it is not wise to receive a real estate gift shortly before the donor's death. The reason is the donee takes over the donor's low basis for the property.

However, if you wait to receive the properties after your father dies, then you will get a new stepped-up basis at market value on the day he dies. This higher basis could save you thousands of tax dollars if you elect to sell the properties. DEAR BOB: My husband and I are following your advice about getting the seller to finance our purchase of our first home. Several years ago we filed for bankruptcy because of unemployment and medical bills, but that is all behind us now and we are earning good income.

But our banker told us it will be difficult for us to get a home mortgage. So we have concentrated on buying a home where the seller will carry back the mortgage. We found one which is ideal. The elderly sellers are wealthy and don't need more than the $12,000 down payment we have saved.

Although we have spent about a month talking with them, we aren't making any progress on getting them to see the benefits of financing our purchase. Any ideas? -- Josie H. DEAR JOSIE: You didn't mention any real estate agent, so I'll presume there is none involved. I've found it can be extremely difficult negotiating face-to-face with do-it-yourself home sellers without the benefit of a real estate agent intermediary.

In your discussions with the sellers, I'm sure you talked about the price and terms. But until you put an offer in writing, you have nothing firm to discuss. For example, almost 10 years ago I recall negotiating to buy a house direct from the sellers who were asking $150,000 for a house I felt was worth about $120,000.

After several weeks of making no progress, I finally put my offer in writing at $110,000 with seller financing. Once they saw my offer on the kitchen table, it was a simple matter for them to counteroffer at $120,000 and I accepted.

Until the sellers see an offer, including the details of the mortgage you want them to carry with the exact monthly payment the sellers will receive, they have nothing to accept. My suggestion is to write up your offer and present it to the sellers. After they understand the monthly payment they will receive, don't be surprised if they accept. DEAR BOB: I am a qualified veteran and would like to use my Veteran's Affairs home-loan eligibility. However, I have talked to several VA lenders and they tried to switch me to an adjustable-rate mortgage instead.

The second lender told me his bank is approved to make VA loans, but hasn't originated one for many months. He said they don't make any money on these nothing-down loans, but take a very high risk. He also said it is hard to get home sellers to pay the VA loan fees which, by law, the veteran cannot pay.

Is this the reason I am getting the runaround on my VA loan application? -- Herb T. DEAR HERB: Yes. It is a well-kept secret that most VA-approved lenders do not want to make VA home loans because they can earn bigger profits with less risk by originating conventional mortgages with higher loan fees. That is why both those VA-approved lenders tried to switch you to a conventional mortgage. DEAR BOB: I saw a newspaper classified ad where a homeowner wants to borrow $18,000 on a second mortgage. I called her and was told she needs the money to pay the arrearages on the first mortgage which has been in foreclosure for almost a year. It seems the borrower, to stop the foreclosure, filed bankruptcy.

Eventually the lender got the automatic stay removed and is now proceeding to hold a foreclosure sale in a few weeks. Since there is only about $30,000 equity, do you think I should make an $18,000 mortgage? -- Nathan Y. DEAR NATHAN: No. Be wary of a homeowner who filed bankruptcy to stop a foreclosure sale. If you make the $18,000 loan to that homeowner, it is probably only a matter of time until she is again in default and will file bankruptcy again to stop you from foreclosing. Considering the very thin equity, I would stay far away from a troublesome loan situation like that. DEAR BOB: I am selling my home and like your idea of the home seller carrying back a second mortgage for the buyer. However, my real estate agent says I should instead carry back a wraparound mortgage since my FHA first mortgage is not due on sale.

Since it has an 8.25 percent interest rate, my realty agent thinks I should offer to carry a wraparound mortgage around 10 percent interest. Does this seem reasonable? -- Matt R. DEAR MATT: Yes. Your realty agent has given you sound advice. The buyer will make one monthly payment to you and then you will use part of that money to make the monthly payment on the old FHA mortgage. That way you will know the first mortgage payment is being made.

If you carry the wraparound mortgage at 10 percent, you will earn a 1.75 percent differential on the amount of the underlying FHA loan, in addition to the 10 percent you'll earn on the amount you loan the buyer.

In summary, a wraparound mortgage is much safer for the seller than would be a second mortgage. DEAR BOB: I have been following the real estate market in our city for the last year and it seems to be rather stagnant. Several reports on TV say this is happening in most of the nation, except for Seattle, Sacramento and a few other cities.

I am getting married in September and my future wife thinks we should buy a home as soon as possible. But I wonder if we shouldn't wait a while until real estate makes a move up. What do you think? -- Blake S. DEAR BLAKE: There is a buyer's market in most cities. That means today is an excellent time to buy because there are more homes for sale than there are qualified buyers.

Of course, if there are major local adverse economic conditions, such as a small town's major employer closing the widget factory, then you should not buy a home. However, if you live in a city with a diverse economy and no major adverse factors, I see no reason not to buy a home in a buyer's market.

Especially in a buyer's market, I recommend making as small a cash down payment as possible. Ten percent is excellent, but not more than 20 percent unless you get a big price reduction in return. By making a small down payment you maximize your income tax deductions and minimize your risk just in case the prices of homes decline. DEAR BOB: I am a title officer with a major title insurance company. It would be a big help if you would clarify for your many readers the difference between a general and a limited power of attorney form.

We have many people who bring us a limited power of attorney form, usually prepared by an attorney, but we need a general power of attorney where a person is representing an absent seller such as a spouse. Often there is not enough time to get a general power of attorney form signed and notarized before the scheduled closing date.

Any seller or buyer who plans to use a power of attorney should consult the title insurance company well in advance to be sure they have the correct form. -- Harvey J. DEAR HARVEY: Thank you for bringing this problem to our attention. A power of attorney form can be very valuable when a buyer or seller is unable to be present for the sale of a property. With a power of attorney someone else, such as a spouse, can sign the papers for the absent person.

A limited power of attorney form appoints an attorney in fact just for a limited purpose, such as to sign papers necessary for the sale of a house. But most title insurance companies now insist on a general power of attorney form, so there is no question the attorney in fact has power to sign whatever forms are required for the sale or purchase.

By consulting the title insurer well in advance of the closing, the right power of attorney form can be prepared and signed, so there are no last-minute problems. DEAR BOB: Several months ago you explained Internal Revenue Code 1034 whereby a home seller can avoid profit tax by purchasing a replacement home of equal or greater cost within 24 months before or after the sale. I understand that part. You also said this tax deferral rule can only be used once every 24 months. That part is clear, too. However, you did not say how long the first home must be owned.

I ask because we got a very good deal on a two-bedroom home which we bought in December 1989. We can now sell it at a handsome profit and buy a larger three-bedroom home which is better for our family. Do we have to keep our first home for 24 months before selling? -- Barbara T. DEAR BARBARA: No. Internal Revenue Code 1034 sets no minimum holding time for the first home in the rollover replacement chain. But when you buy the second home, it must be owned at least 24 months before you can sell it and defer the profit tax by purchasing a replacement of equal or greater cost. Consult your tax adviser for full details. DEAR BOB: In a few months we plan to put our home on the market for sale due to a job transfer. Before then we plan to paint it inside and outside. But we are wondering if we also should remodel the bathrooms and kitchen. I hate to think of the mess. They really aren't bad or very old-fashioned, but they could use some modernizing. Should we do this work? -- Belinda W. DEAR BELINDA: I suggest you invite two or three local real estate agents to inspect your home and advise if the bathrooms and kitchen need renovation. Chances are you don't need to do that major work.

But you are very wise to completely paint the house. In the process I presume you will clean and repair as necessary. Another profitable improvement, which usually doesn't cost much, is new carpeting. Be sure to install a neutral color, such as beige, and put in the best padding you can get. Also check the landscaping to be sure your home presents a pleasing appearance because the first impression is very important. DEAR BOB: We made a $5,000 deposit to buy a home. After some negotiation, we agreed on the price and terms with the seller. We made it clear to our real estate agent that if we can't afford the mortgage payments we will cancel the sale.

The agent has been unable to get us qualified for a fixed-rate mortgage and we don't want one of those adjustable mortgages, so we want to cancel and get our $5,000 back. But the seller refuses to refund our money. He says there is nothing in our purchase contract about being able to back out. But it was clearly agreed with our agent we could get our money back if we couldn't get a mortgage. How can we get our refund? -- Josh P. DEAR JOSH: The Statute of Frauds requires binding contracts for the sale of real estate to be in writing. If you had an unwritten "side agreement" with the agent it is probably unenforceable because it was oral. Since a mortgage is available, but not on terms you like, and you failed to put a mortgage finance contingency clause in the written contract, if you sue the seller for a refund you have several legal hurdles to overcome. Please consult a real estate attorney for details.

Readers with questions should write Robert J. Bruss directly at P.O. Box 280038, San Francisco, Calif. 94101.