Word of Warning: If you are a listing agent for a seller trying to sell by short sale, make sure you are also advising your seller to get legal advice before signing the stack of papers that the lender approves at the end of the day.
We are hearing/reading about this type of scenario: Seller lists property subject to lender approval of the short sale. Buyer comes along to buy this property. (There can also be variations on the theme here where sometimes an “intermediary” offers to “buy” or enters into an option contract to buy with the intent to sell to a second buyer for a higher price at a closing that happens right after the first closing). At any rate, the lender might agree to take some amount of money in order to remove the mortgage/security interest from the seller’s property. However, the note or the obligation to pay might still exist. Unless the seller gets a copy of the original note marked “paid in full” or some other release of the loan (not just a release of the mortgage), there is a distinct possibility the seller will get a “bill” for the balance not covered by the proceeds of the short sale.
I have also read that some lenders won’t approve a short sale unless the seller signs an unsecured note for the balance. This might make a difference to a seller when he is trying to decide whether or not to seek lender approval in a short sale.