With short sales the seller is already risking getting a 1099 for the difference of what they owed 
on the home and what it sold for after their “bank” approved the sale, this is known as phantom income. As such it’s standard practice for Realtors talking to a seller about selling short to advise them to speak to a CPA and/or real estate / tax attorney about the tax consequences before doing it…Well, it’s getting even more complicated now, apparently there’s a new trend of lenders beginning to require sellers to sign a note to repay that difference or they will not allow the sale; this is on top of the 1099.
Frequently I find myself at a listing appointment and find that the homeowner owes the bank far more than what their home will sell for. If they are needing to sell because they can no longer afford the home, need to move, etc. they will likely fall into a short sale scenario. In many cases the homeowner will seek a second opinion, even a third or fourth. Unfortunately they may eventually find a Realtor that either doesn’t know better and takes an overpriced listing or “buys the listing” because they are hoping to generate new buyers/clients from the listing. Regardless, the homeowners can lose alot of time which is frequently the one thing they do not have.