FHA vs VA Short Sales: Agent Playbook for Faster Approvals

FHA vs. VA Short Sales: Agent Playbook for Faster Approvals

Quick Guide: What Agents Need to Know

• FHA PFS: Appraisal-driven. Servicer sets approval targets off the FHA appraisal and ATP. Documentation must be spotless.

• VA Compromise Sale: Often faster after intake. VA may waive a deficiency if collection creates "serious impairment." Watch entitlement.

Key terms you’ll reference with the servicer

• ATP (Approval to Participate): FHA’s green-light number from its appraisal. Treat it as both a value signal and a minimum net target. If your offer price and net don’t pencil to ATP rules, expect a counter or denial.

• Net Sheet: One page that shows sale price minus all costs to the penny. Must match program rules and your contract terms.

• Deficiency: Unpaid balance after the sale. FHA outcome varies by investor/servicer. VA may waive if collection harms the borrower.

• VA Entitlement: The VA benefit securing the loan. Depending on the payout, some entitlement can remain after a Compromise Sale.

Fast-track checklist

1. Build the file: single, labeled PDF in this order: hardship letter, income docs, bank statements, mortgage statement, listing, offer, buyer funds, net sheet, program affidavits

2. Check completeness: no missing pages, date-stamp docs, matching names and addresses

3. Prep valuation: 3-5 comps with condition notes and repair bids ready for rebuttal

4. Set list price: drive traffic but land near ATP/net (FHA) or reasonable market value (VA)

5. Shape terms: use appraisal gap or repair credits to protect net

6. Communicate weekly: confirm intake, valuation ordered, value received, review, approval

7. Keep a backup buyer: refresh signatures and proof of funds every 30 days

FHA vs. VA: what changes for your workflow

• Valuation anchor
• FHA: Appraisal -> ATP. Your counter strategy is comps + repair bids to move the value or net tolerance.
• VA: Reasonable market value with technician oversight. Present clear adjustments, photos, and bids.

• Deficiency posture
• FHA: Investor driven. Don’t promise waivers; set neutral expectations.
• VA: Position for "serious impairment" when warranted; document budget shortfall clearly.

• Speed
• Both: 45-120 days is common from complete package. VA often accelerates post-intake if the file is airtight.

ATP in action: simple numbers

• FHA appraisal comes back at $400,000 -> Servicer issues ATP.

• Program requires, for example, a 88-92% net of value (illustrative).

• Your target net is about $352,000-$368,000 after all costs.

• If your offer is $390,000 but fees push net to $345,000, adjust: tighten credits, add gap, or price at $405,000 to land the net.

VA value example: simple numbers

• Market data supports $400,000 reasonable market value

• Buyer at $395,000 with $5,000 repair credit -> effective price $390,000

• If closing costs bring the net below what VA will consider reasonable, adjust terms: reduce credits, add small appraisal gap, or improve price with concessions elsewhere

• Document condition with photos and bids to support any value adjustments

Common hang-ups and quick fixes

• Incomplete statements/paystubs -> Checklist + page counts; reject buyer packages with missing initials before submission

• Overpricing -> Price to net, not list vanity. Use terms to solve the math

• Slow value rebuttal -> Have a pre-built grid with comps, photos, and line-item repair bids ready to send within 24-48 hours

Bottom line for agents

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