If you are selling your home short you first of all need to find a realtor who is very familiar with the process and very experienced, or that at the very least has a support system, a broker or mentor who IS experienced. These are delicate and complicated negotiations and you need to be sure your agent understands that YOU are their client and not the bank, but you really need a realtor, DO NOT try to do this on your own. You need someone looking out for YOUR best interests, not their own and not the banks. There are many stumbling blocks and pit falls along the way to a successful short sale. A realtor knows what to look for and how to avoid them.
Fortunately, you can get all the explanations and information you need here on trulia......to start.........try Dan's blogs..........and you can also look up other Q&A;s for that topic
If you are contemplating a short sale, you might want to speak to a local agent, who handles them, to get an idea of whether this might be a viable option for you.
Shanna gave you an answer, but like many things there is always more. Volumes could be written, but I've done a blog post about the many parts involved with getting from offer to bank's acceptance. It's attached through the link below.
A short sale is when you sell your house for less than what is owed on the property. A short sale requires approval from the lender(s). Also, the owner/seller must be able to prove a financial hardship before the lender(s) will even consider approving short sale. Lender(s) will NOT approve a short sale just because a home is worth less than what is owed on it.