A "short sale" happens when the buyer purchases the property for less than what is owed on it. The bank may agree to accept a lower offer to save on the expensive legal fees incurred when a foreclosure takes place.
There are additional benefits to you and to the seller. For you, you gain a wider selection of properties and beat the crowds to those that are most desirable. For the seller, they avoid the big red X a foreclosure puts on their credit--not to mention their psyche.
Pouring over Notices of Default isn't all that much fun, so why not make your realtor do that work for you? Your realtor can find the ones that match what your looking for, contact the seller, the lender, help you negotiate, etc and then sell it for you for a profit. I personally love this kind of stuff, so let me know if I can help you out with your bargain hunting!
FOR ALL OTHERS: The only "sellers market" in america is the foreclosure market. Don't expect any deals from a foreclosure as the bidding process brings 20-30 people to bid on almost every deal. A deal that was already priced at market.
It's easier to get a deal by going to a realtor, asking them to find the oldest property on the market and start dropping discounted offers. In addition, you won't have to wait 30-60 days to hear an answer.
Trulia has this information at the link below.
Customer Service Representative