All offers must be presented to the seller. However, if is is a short sale the property is still in the sellers name therefore the seller can accept one or the other. As his representative, you should present to him the good and bad points regarding each type of loan. Yes, an FHA loan is more difficult than a conventional loan. Generally with a conventional loan ,there are no conditions on an appraisal. With an FHA loan, however the buyer cannot get their loan if there are conditions on the appraisal unless seller or buyer takes care of those conditions/repairs.In most situations, the conventional 20% down loan would be the best bet. However, if the homeowner is not in default and ready to go to foreclosure,house is in good condition and there is time,he could go with the FHA contract,that would net the seller more money.The reason I say this is because the bank could hold the homeowner liable for the monetary difference as to what is owed hence reason for the name "short sale".If this is the case, then the seller might want to get as much as he can for the house but this is his decision not yours as his agent.