Avoiding foreclosure

By Dave Frank

Appeal Staff Writer

A sale that lets homeowners avoid foreclosure and manage overwhelming loan payments is becoming popular in Carson City.

A "short sale" allows a borrower to sell their home and give that money, even though it is not the entire loan payment, to the lender in order to avoid foreclosure.

Short sales usually happen when a person owes more on a home loan than the home is worth. The cause is often the falling value of the home combined with unmanageable loan payments.

The lender will take the money rather than foreclose on the home to recoup some of the costs and avoid being forced to market the home.

Short sales often hurt an owner's credit score less than a foreclosure. Lenders will also often forgive the difference owed.

Short sales were rare in Carson City a few years ago, but 2008 is on track to have the fewest number of home sales in 20 years and the most number of foreclosures in seven years.

The average price of a home sold is also so far this year lower that the past three years, which, from 2000 to 2005, had risen by nearly $175,000.

There are no records of the number of short sales in Carson City, but, according to the Multiple Listing Service real estate database, 41 such homes in Carson City and Carson Valley being marketed as short sales.

Real estate agents were discouraged from bringing up the option of short sales a few years ago, said Alan Saunders of Realty Executives Nevada's Choice in Carson City, and lenders were unlikely to approve them because they could foreclose on the house and recoup the costs through a sale.

Short sales are much more common now, however, he said, and many agents are taking classes on the topic to keep up with the market and customer demand.

"So many of my clients come in and say, 'What am I going to do?'" Saunders said.

Short sales are for owners already in "bad shape," said Red Dalen of ERA Pioneer Properties in Carson City, but the short sale at least "leaves them with some dignity."

Lenders approve short sales because at least they know they'll get some of the loan payment back that way, he said, but the various standards of lenders can be a hassle for agents.

Jim Wilson of Century 21 Jim Wilson Realty in Carson City said this is part of the reason his business, though it may be the only on in Carson, won't do short sales.

Even though he and a client might have an agreement, he said, they have to be dependent on the "whim" of the lender.

• Contact reporter Dave Frank at dfrank@nevadaappeal.com or 881-1212.

By the numbers

Homes soldAverage priceForeclosures

200898$325,61433 (through April 13)

2007446$332,14652

2006615$346,24812

2005900$340,9853

20041,033$285,25411

20031,104$230,29631

20021,106$202,06952

2001 996$180,60640

Source: Carson City Assessor's Office