Simply put, this is only legal verbage that you will also see in the contract if one is written, it says two things, first the price show is not an absolute value that will be accepted by the bank, which in short sales is a third party in the contract, but one that has power of decission and also power to dictate terms, and price of the home. Supposedly this home is being sold for less than the principle owed on the hiome. The listing price has no bearing or even binding to the third party as it is up to them to decide whether they wish to take the amount listed or any offered price. Third party can at anytime, even after hey have told the home owner that they would entertain the thought of a Short Sale, decide to foreclose on the home and refuse all or any offer submitted even ones that were at list price or even higher than list price. If they decide to accept the offered price they may do so with the notion of paying no closing costs and making it the responsibility of the buyer. As far as the listing price is concerned, it is a price that a diligent Agent has come up with through CMAs and through what ever knowledge as to what the principle still owed might be. The Bank who is in the third party seat has not nor will it ever say that the price listed was the price they were willing to accept. They will take all offers and send it to one of their underwriters to be evaluated and to determine if at that time the bank is willing to take that offer, or to foreclose on the property. Then if theoffer is accepted, the bank may then decide after the sale whetehr or not they will forgive the seller of the remainder of the principal that was owed or whether they wish to go after the remaining principal with the seller of the property. They have up to 5 years to go after the seller for monies still owed after the sale. They may forgive the remaining principle and if so they may and most likely will send the seller a 1099 for the difference of the sale and the principal owed. this would be like income to the seller and he would have to pay capital gains on the amount on the 1099. If the seller had lived in the home for 2 of the last 5 years, the seller may opt to take the exemption of the first $250,000 of this amount if single or up $500,000 of this amount if married and filing jointly.