Definition of a Short Sale: The Real Property is encumbered for more than it's value AND the Seller does not have the assets to pay the difference 
between the value and the debt (nwmls)

Writing an Offer on a Short Sale

What I have learned when representing the Buyer: A few helpful Questions to ask the Listing Agent:  
1) how many banks are involved. Remember that the first position takes precedence but the 2nd position can sabotage the sale.
2) has the seller and seller's broker submitted the entire short sale package to the bank?
3) has the bank ordered and received the Brokers Price Opinion - Valuation of the Property? this can happen before or after a contract is negotiated between you and the seller.
4) is the listing agent in direct contact with the Bank's negotiation team? - one person in particular or is the listing agent working with a B of A online system such as Equator? Equator is a web based program that manages all documents and communication. The Listing Agent will be working with customer service over the phone and a negotiator online.  Often times, the customer service rep will put the listing agent in touch with a Team Leader if there is a glitch or hold-up in the process. 
5) does the listing agent have 3rd Party Approval to speak with the bank?

6) Has the bank scheduled a Trustee's Sale?  The trustees sale is recorded to title. Any postponement of the Trustees sale is not recorded and must be verified directly with the Trustee. If a Trustees Sale is scheduled and you really want this property, ask the listing agent to make an effort to postpone.

7) Has the Seller hired Third Party Negotiator?

What you need to provide:

-  "proof of ability to complete the purchase"

- Patience!

You will write an offer. You will negotiate with the Seller. Once you come to terms, the Seller will submit the contract to the bank.  If the bank chooses to move forward with your contract, you will receive "Lender's Consent" and a Form 90ss (notice that Lender's Consent has been received -  from the Listing Agent. You want to see the "Lender's Consent" which dictates final conditions of the sale.

It is only when you receive Lender's Consent that computation of time begins and the contract's contingencies go into effect.  Keep in mind, you may have certain contingencies go into prior to Lender's Consent. I recommend that you invest in the inspection prior to writing the offer. It is important to know what you are getting into and you can ask for repairs from the bank at the beginning of the process.

Many banks do not require that the seller submit all offers. I just closed a sale, on the listing end, with Citibank and they did not require that we submit all contracts. I have another seller in contract; their bank is B of A which did not require that additional contracts are submitted. When I represent the Buyer, I make sure that the Short Sale Addendum stipulates that the bank will not accept additional contracts. I have yet to have a bank argue with me.  Though I did present an offer on a short sale just today where we could not do this because they already had an offer in to their bank. 

There is more to this, but the above represents the broad strokes!  And always remember, Consult with an Attorney!