In most successful short sales, the lender gives up the right to pursue a deficiency judgment against the homeowner. In a properly managed short sale, the home is sold at a price that should be close to market value and in almost all cases will be better than an REO sale resulting in a lower deficiency or no deficiency at all if waived.
In deficiency states like Missouri and Illinois, the bank has the right to pursue a deficiency judgment in 100% of foreclosures. In a foreclosure the home will have to go through an REO process if it does not sell at auction. In most cases, this will result in a lower sales price and longer time to sale in a declining market. This may result in a higher deficiency judgment.