Buying and selling any real estate is risky whether it's a traditional sale, reo, or short sale. If you love the property you do everything in your power to secure an approval and that's getting it all done up front.
Good luck. I hope it goes well for you.
Absolutely. It's quite common with banks to require that before begin to process a short sale. Some of them also require the home inspection to be performed before they begin the process as well.
The seller has to accept your offer first as they do own the house. The bank dictates the process in which they will work with the seller to approve the short sale. Each bank is different. Your buyer's agent should "interview" the listing agent to determine the process prior to your offer/PnS.
But you CAN go straight to PNS if you want to, but if you're uncomfortable, tell your agent you'd rather just put your "offer" in writing and then iron out the terms of the PNS with a good attorney.