Dear Edith: Last year I wrote to you in an absolute panic, as we were facing foreclosure. I took your advice, and now I am writing again, as you requested, to share the good news. Our mortgage company offered an interest-only loan for five years. We are able to stay in our house despite the fact that my husband is laid off for the winter. -- C.R.

Answer: Many thanks for reporting back. Usually we're all just left wondering what finally happened.

Half the troubled homeowners who negotiate "workouts" with their lenders these days end up losing their properties anyhow. The good news, though, would be that the other half make it through with their new arrangements. Glad to hear it's working out for you.

Seller Concessions

Hi Edith, I am curious. When making an offer to buy a house, what does it mean if you ask for "seller's concessions"? Isn't this basically the same as just offering a couple thousand dollars less when you submit your offer to the seller? Is there any advantage to one over the other? -- E.S.

Answer: As so often, it all depends

If your written offer said you'd buy only ifthe seller would agree to pay $2,000 of your closing costs, you'd be asking for a "seller concession." If instead you simply offered $2,000 less for the property, then yes, the seller would come out the same either way. So would the buyer, more or less.

So where's the advantage? A concession might help if a buyer who was $2,000 short of cash couldn't buy any other way. The arrangement would get the house sold, thus benefiting both parties.

There are plenty of potential drawbacks, particularly with larger concessions than the one in your example. The bank's appraiser might report the place wasn't worth the higher purchase price. The buyer's mortgage plan might limit concessions. The buyer would end up paying on a larger mortgage loan. Capital gains tax considerations could be involved. The neighborhood might see artificially inflated property values.

No one financial strategy is ever right for everyone. Seller concessions can be useful in one situation and not in another. It's true we are seeing more of them lately. But once again, the answer depends on the needs of the parties involved.

Buying Vacant Lots

Hi. I have this idea about buying some residential vacant lots in Las Vegas and in California and holding. Is this a good idea and would it have any tax-related consequences, etc.? -- H.

Answer: You're obviously a beginning investor, and vacant land is not a wise purchase for a beginner. Buying it often requires all cash. It yields no income and involves holding costs for property taxes and insurance. Even experienced investors can get caught when trying to predict the direction of future growth. That would be particularly true in an area one wasn't familiar with.

If you intend to become an investor, line up your own real estate lawyer and CPA before you start. They can analyze your situation and advise you better than I can. Continued...