FHA Short Sales: What the Approval to Participate (ATP) Really Means
FHA Short Sales: What the Approval to Participate (ATP) Really Means
Agents handling FHA short sales — don’t misread the Approval to Participate (ATP). Learn what it really means, how it affects your closing timeline, and how to avoid a high appraisal that kills the deal.
This post is for real estate agents handling short sales with FHA loans. A common mistake I’ve seen repeatedly can cost you the deal — and your commission.
You submit a short sale offer, the lender orders an appraisal (not a BPO — which is often your first clue this is an FHA loan). Once the appraisal is complete, the lender sends you an Approval to Participate (ATP).
Most agents mistakenly think this document is simply a pre-approval or a guideline for what the bank hopes to receive. It’s not.
The ATP is a HUD-generated form. It outlines:
The exact minimum net the lender must receive
The deadline to close (typically 120 days from issue)
If you can’t submit an acceptable offer meeting those terms by the expiration date, the lender will move forward with foreclosure or deed in lieu. Either way, the short sale dies — and you don’t get paid.
The Problem: ATP Comes in Too High
Getting an ATP is great if the number is realistic. But often, the net required is above fair market value, making the sale impossible. At that point, unless the value is reduced, your short sale is dead in the water.
How to Avoid a High FHA Appraisal on Your Short Sale
There’s no guaranteed fix, but you can take steps to protect your client — and your commission:
Route all showing calls to you directly.
That way, you know whether it’s a buyer or the appraiser.Talk to the showing agent.
Ask if they're the appraiser or if it's a buyer showing.If it’s the appraiser, request their contact info.
With third-party firms, calls might come from an office — so ask clearly.Meet the appraiser at the property.
This should be per the seller’s instructions. Explain that it's a short sale and provide:Copies of inspection reports and repair estimates
Market comps and a copy of the current contract
Any negative buyer feedback or conditions affecting value
Make sure the appraiser understands the purpose: to determine true market value — not a number that will kill the deal.
Key Takeaway
If the ATP value is too high, there’s no going back. Lenders typically will not revise the value once the appraisal is in. So your window to influence the result — ethically and factually — is before the appraisal is completed.
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