In addition to hiring an agnt to represent YOU you also want to chose and agent that uses a 3rd party short sale negotiation professional with a history of success. Both of these services are 100% free to you and your Landlord (as long as a deficiency waiver is negotiated). If your Landlord is working with the HAFA program things may be a bit more streamlined but it's still not something he will want to take on alone. Best of luck and contact us if we can help.
Having a rental agreement in place on the property really doesn't give you any special consideration with a purchase -- these are two separate things. I can't imagine a contract (or bank) that allows you to make period payments to an escrow account while your short sale is being negotiated. Definitely smells fishy to me.
First, do you want to buy? And second, are you qualified to buy? Talk to a loan officer and see if you can make a purchase. Then, if you want to move forward, I would review this home along with other homes in the market. Ultimately, if you can get a good deal on your rental home, and this home is the best fit for your needs, then get representation and make an offer.