A homeowner found himself in a bind last year after moving to Atlanta for a new job.

He couldn't sell his condo for what he owed on the mortgage. And he couldn't find a renter who would pay the $730 per month mortgage payment plus $150 per month association dues at his Donelson two-bedroom townhouse.

So, he sold the home as a short sale — the bank agreed to take less than what was owed as a way to avoid foreclosure. In this case, the homeowner’s bank took $89,000 for the home when it was sold to a new owner in November, about $8,000 less than what he bought it for just two years prior with no down payment.

About one of every 13 homes for sale in the Nashville area is listed as a short sale on the local real estate agents' multiple listing service.

The sheer volume of desperate homeowners, stuck in homes they can no longer afford because of rising unemployment and flat home values, has led some real estate agents to try "short sales" as a way to get homeowners out of properties without a foreclosure.

Some real estate brokers are responding by changing the way they do business — working exclusively with homeowners who owe more money on properties than the homes are worth.

The concept is that a "short sale" will be less damaging to someone's credit than a foreclosure. Also, the bank might save money compared with what a foreclosure would cost in legal fees, maintenance and resale costs. And the eventual buyer might walk away with a good deal at a good price.

But some short sale practices are controversial in an industry already battered by rising numbers of foreclosed or distressed properties, and a recent history of questionable mortgage practices. So, regulators and real estate brokers say homeowners must be alert to a slew of potential risks and consequences of a short sale.

There is no industry standard for best practices. For instance, some brokers or investors get distressed homeowners to give them a legal interest in the property with little or no compensation, via such documents as an option to purchase or power of attorney.

The broker or investor then goes out and tries to find another buyer to flip the property to a new owner. In other words, the investor or broker buys it and then resells it quickly to someone else for a higher price, sometimes on the same day, pocketing the spread. That's all well and good if another buyer is found. If not, the flipper can just walk away and the home is foreclosed.

Not everyone likes the way some brokers handle such sales. "A situation like that is ripe for abuse,'' said Charles Sanger, a real estate attorney at Bradley Arant Boult Cummings.

He said options tie up the property so it can't be sold to other buyers. He would only give power of attorney to his most trusted adviser, not a real estate broker.

"That prevents you from selling it without that person's permission,'' he said. "I would not advise a homeowner to do that."

A spokesman for the Tennessee Department of Commerce and Insurance, said the agency frowns on brokers taking on power of attorney, but it's not against the rules. In some cases, a seller or buyer might be out of town and wants a broker to handle the closing sale.

Sometimes, lenders won't agree to a short sale without making the sellers sign documents promising to repay the bank's loss on the sale. That's true for foreclosures as well, where lenders can try to come back after homeowners for the bank's loss on a mortgage.