Q: Although the following incident happened to my parents a few years ago, I am still bothered about the way it was handled.

My parents signed a contract to sell their home for an amount somewhere around $70,000. The prospective buyer gave the real estate agent $1,000 in earnest money. The home inspection was good with the exception that the basement walls showed that there had been water in the basement at one time. My parents admitted to this -- the drain at the bottom of their outside cellar steps had become clogged on one occasion and the basement flooded. They remedied the problem and installed a sump pump to prevent a recurrence.

The buyer demanded that they sell the house for $3,000 less than the agreed-upon price after seeing the results of the inspection because she was concerned about mold. I personally spoke to the inspector, who said that the issue could be corrected for between $500 and $1,000 and he was surprised that she was demanding $3,000 -- almost a 4.5 percent reduction. My parents were content with the $1,000 difference. The buyer, however, would not take less than the $3,000 and the agent returned her earnest money.

The $1,000 earnest money was really not the issue. What upset me and my parents was that we felt the buyer was renegotiating the price of the house after an agreement had been reached, and the Realtor did nothing to protect my parents' interest, nor has anyone been able to substantiate the validity of the buyer's argument to our satisfaction.

-- Bridgeville, Pa.

A: It appears that an inspection contingency addendum was included as part of the purchase agreement. Such an addendum allows a buyer to hire an inspector (of the buyer's choice and determination of qualifications) to inspect the property. The inspection is usually performed within a few days of signing the purchase agreement.

The addendum provides buyers with the following options: 1) Renegotiate the purchase agreement based on conditions found by the inspector. 2) Accept the property. 3) Cancel the purchase agreement and obtain a refund of their earnest money.

When a purchase agreement is renegotiated, the seller makes some improvements or lowers the purchase price. In the case of your parents' sale, the listing agent should have investigated the motivation of the buyer to determine why they wanted the money rather than the repairs. Perhaps the buyer's motivation was a result of cold feet and not mold in the basement.

Our house is in a deteriorating area and we had been planning to sell and buy in a nicer area. However, with the transfer, should we buy a home here (and rent it out during our absence) and rent on the East Coast? Or should we buy a house in our new location and then buy a home on our return to California?

A: You have a complicated situation. It is important to investigate the relocation benefits available through your husband's employer. Many companies have guaranteed sales plans, relocation benefits and relocation consultants.

Generally, I would not recommend becoming a property manager 2,000-plus miles away from your property. However, if you feel your current property will appreciate in value and you have someone to lease, manage and maintain your property, you could consider keeping your present home.

If you sell your property, you will be taxed on profits in excess of $500,000, assuming that you have lived in the property for two out of the past five years as your principal residence.

Real estate markets are cooling throughout the country. Given this fact, the economic dimension of investing in an East Coast property has severe constraints for a two-year holding period.