Before recently most people had never even heard of a short sale, now buyers are out looking for them to make sure they are getting a deal.
A short sale is when the bank agrees to discount the loan balance for a seller who owes more on his mortgage than the home is currently worth. And since nowadays these are everywhere, you are going to find one on your house hunting trip whether you want to or not.
So there is a down side to these things, you have to work for them. There is the extra step of getting approval from the bank and this one step can add months and months to the process. Especially now because they are so backed up with all the short sales being processed.
First of all, you want to be aware of what your are getting into, patience and persistence are going to be key. Do not think your transaction will be different and be easy and short, because it won't. So do not plan on a particular move in date, have a place to stay till it is all finalized.
Second, you definitely need a realtor who has done these before. You need someone advising you properly and calling the lender daily on your behalf.
Thirdly, try to avoid short sales with extra liens on them. The more banks you include the longer it will take. If you can help it, you also want to avoid homes that already have other offers. This too will extend the process and decrease your chances of getting the home.
Fourthly, you want to price right so have your agent research the comparables, do not just go off the list price. The bank may be low-balling to attract multiple offers. You will also want to get pre-approved or the bank my not even look at your offer.
Fifthly, try to get the lender to pick up the closing costs. You also want to let them know that you won't be paying for appraisals and inspections until you have an approved offer. No reason to be throwing money away on every house you MAY get. While you are at it, try not to put in earnest money over 3K in case you want to pursue more than one home at a time.
Finally, be willing to be annoying. You should be calling your agent at least once a week so that you know they are calling the lender constantly. The processor dealing with your loan will not be putting your off because they want the phone calls to stop. But if you are willing to put in the effort, you can score a major deal!