Sonic Realty

Understanding Short Sales: A Guide for Homeowners and Buyers

Short sales

A short sale occurs when a homeowner sells their property for less than the amount owed on the mortgage, with the lender agreeing to accept the proceeds as complete satisfaction of the debt. Short sales are typically pursued by homeowners facing financial hardship and unable to afford their mortgage payments, providing an alternative to foreclosure. Let’s explore the ins and outs of short sales, including the process, benefits, and considerations for homeowners and buyers.

Process of a Short Sale:

  1. Financial Hardship: Homeowners facing financial difficulties, such as job loss, divorce, medical expenses, or other circumstances, may consider a short sale to avoid foreclosure and minimize the impact on their credit.
  2. Listing the Property: To initiate a short sale, homeowners must work with a real estate agent to list the property for sale. The listing price is typically below the outstanding mortgage balance to attract potential buyers.
  3. Negotiating with Lender: Once an offer is received on the property, the homeowner must seek approval from their lender to proceed with the short sale. This involves submitting a hardship letter, financial documents, and a purchase contract to the lender for review.
  4. Acceptance of Offer: The lender evaluates the homeowner’s financial situation, the proposed sale price, and the offer terms to determine whether to accept the short sale. If approved, the lender issues a short sale approval letter outlining the terms and conditions of the sale.
  5. Closing the Sale: Upon receiving short sale approval, the sale proceeds like a traditional real estate transaction, with the buyer completing due diligence, securing financing, and closing on the property. The lender receives the proceeds from the sale, and the homeowner is released from their mortgage obligation.

Benefits of Short Sales for Homeowners:

  1. Avoid Foreclosure: Short sales offer homeowners an opportunity to avoid foreclosure and the associated stigma and consequences, such as damage to credit scores and difficulties obtaining future financing.
  2. Debt Relief: By agreeing to the short sale, lenders forgive any deficiency between the sale proceeds and the outstanding mortgage balance, relieving homeowners of additional debt obligations.
  3. Control Over Sale: Unlike foreclosure, where the lender initiates the sale process, homeowners maintain control over the short sale process, including listing the property, reviewing offers, and negotiating with the lender.

Considerations for Buyers:

  1. Potential for Delays: Short sales can be complex and time-consuming, with lender approval often taking several months. Buyers should be prepared for potential delays and uncertainties throughout the process.
  2. Property Condition: Short-sale properties are typically sold “as-is,” meaning buyers may inherit any existing issues or deferred maintenance. A thorough home inspection is essential to uncover any potential issues.
  3. Competition: Short-sale properties may attract multiple offers, leading to competitive bidding. Buyers should be prepared to make a firm offer and remain patient throughout the negotiation.

In conclusion, short sales offer homeowners facing financial hardship an opportunity to avoid foreclosure and minimize the impact on their credit. While the short sale process can be complex and time-consuming, it benefits homeowners and buyers. By understanding the process, benefits, and considerations associated with short sales, homeowners and buyers can navigate this alternative to foreclosure with confidence and success.

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DJ Peterson

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Affiliated Business Arrangement Disclosure Statement
This is to give you notice that Sonic Loans Inc., Sonic Title Agency LLC, and Sonic Realty LLC have a business relationship. The nature of the relationship between the Referring Party and the provider(s), including percentage of ownership interest, if applicable, is: Sonic Loans Inc., Sonic Title Agency LLC, and Sonic Realty LLC are all 100% owned by the same party. Because of this relationship, this referral may provide any of the above parties with financial or other benefit.
A. Set forth below is the estimated charge or range of charges for the settlement services listed. You are NOT required to use the listed provider(s) as a condition for settlement of your loan on, or purchase, sale, or refinance of, the subject property.
THERE ARE FREQUENTLY OTHER SETTLEMENT SERVICE PROVIDERS AVAILABLE WITH SIMILAR SERVICES. YOU ARE FREE TO SHOP AROUND TO DETERMINE THAT YOU ARE RECEIVING THE BEST SERVICES AND THE BEST RATE FOR THESE SERVICES.
Provider and Settlement ServiceCharge or Range of Charges
Sonic Realty LLC1%-6% of purchase price
Sonic Title Agency, LLC Title Insurance Policy: $950 - $1706 on a $250,000 property. (Rates vary and are dependent on the state, selling price, and loan amount on the property.)
Title Search Fee: $250 - $325 (where applicable)
Closing Fee: $450 - $650
Sonic Loans Inc.

This company provides various real estate mortgage loan origination activities either as a third-party originator or a mortgage broker, including loan pre-qualification, competitive bid process (when providing third-party origination services), loan origination, loan pre-approval, loan structuring, processing, and closing.

Loan Origination Charge: 0-3 % of loan amount (may include 3rd party fees)
Loan Discount Fee/points: 0.5%-6% of loan amount.
Application/Processing Fee: $0.00 - $875.00
Flood and tax service: $0.00 - $95.00
Underwriting Fee: $0.00 - $1295.00
Document Review Fee: $0.00 - $400.00
Appraisal Fee: $0.00 - $850.00
Credit Report Fee: $0.00 - $135.00

Actual charges may vary according to the particular lender selected, the particular services provided, and the underlying transaction, borrower selections, etc. Some or all of these fees may be charged by third parties and/or the Member Mortgage Lender/Mortgage Broker. The Member Lenders and Mortgage Brokers have agreed to pay a fee ranging from 0.5% to 2.75% of the loan amount to Sonic Loans in connection with a range of loan origination services provided by Sonic Loans to the Member Lender/Mortgage Broker. The fees are paid either directly to Sonic Loans by the Member Lender/Mortgage Broker or billed directly to you at closing.
B. Set forth below is the estimated charge or range of charges for the settlement services of an attorney, credit reportingagency, or real estate appraiser that we, as your lender, will require you to use, as a condition of your loan on this property, to represent our interests in the transaction.
Sonic Loans Inc. provides mortgage lender/broker services. Sonic Realty LLC provides real estate brokerage services. Sonic Title Agency LLC provides title insurance and settlement services.

Provider and Settlement ServiceCharge or Range of Charges
Appraisal Fee$0-$800
Credit Report Fee$63-$125
 Actual charges may vary depending on the lender and loan program selected which can be found on your loan estimate.
ACKNOWLEDGMENT
I/we have read this disclosure form and understand that Sonic Loans Inc., Sonic Realty, LLC, or Sonic Title Agency LLC are referring me/us to purchase the above-described settlement service(s) and may receive a financial or other benefit as the result of this referral.