Short Sale CASE STUDY: 012

Approval To Participate

Before we get too excited, this doesn’t mean that our offer has been approved.  In fact, they haven’t even reviewed it yet.  This is just FHA approving the seller and the property to participate in a short sale as a loss mitigation option.

In a perfect world, this would have been completed before we even received an offer. This basically means that they have reviewed the sellers hardship and are allowing him to sell that home on a short sale at a pre-determined loss.

In this case, the bank has sent an FHA appraiser out to the home and determined that the value is $210,000.  FHA short sales have a built-in discount that they will accept in terms of net proceeds.  They will accept 88% of this value for an offer received in under 30 days, then 86%, then 84%.  Remember this is NET proceeds. Commissions, closing costs, taxes are all paid off the top and the bank gets the rest.

Here is what the FHA Approval to Participate looks like.

We Have A Winner

88% of their approved listing price means that the bank will accept an offer that NET’s them $184,800.

We have that…

So now it is just a matter of getting through the final steps in this process in order to get the Short Sale Approval we are really looking for.

Step 1 is to have the seller sign this document to make the Approval to Participate official. Once I have that back and uploaded I will be able to upload the offer we have and this short sale will start to look like most short sales.  Upload the offer and estimated HUD-1, Jump through whatever hoops they set out, and get our approval. With any luck we will have that completed in just a few weeks.

Stay tuned.



  1. […] to go through.This was obviously a shock to me because I was under the impression (based on the Approval to Participate) that the seller was getting at least $750 to help them move.As it turns out, FHA would only pay up […]

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