Recently, one of the local newspapers ran an article on the risks associated with short sales. Many agents are not familiar with the drawbacks of short sales and thus, do not explain them to nor do they properly prepare their sellers. Though Arizona is an anti-deficiency state - meaning that if a loses his/her home through foreclosure, the lender cannot collect the remaining dollars that the seller contracted to pay. Some of the lenders also honor that system with the short sales; HOWEVER, not all of them do.
"I knew that there is a great deal of confusion said Michelle Lind, general counsel for the Arizona Association of Realtors. She said that real-estate lawyers differ on which situations are subject to the anti-deficiency statutes but that, depending on the kind of loan and the terms of the contract, the seller can be liable. "The law is unclear," she said, "and there are many variables that factor in."
It appears as though the second mortgages or home equity appear to be the biggest culprits. Often, the seller is required to agree to pay certain amounts in order for the lender to approve the short sale in the form of promissory notes.
If you, as a seller, wish to short sell your home, be certain to consult with an attorney and a CPA. I have included the entire article which contains great information for anyone considering a short sale: