You better have a good listing agent for your short sale, one who has a 90% or better success rate. Meaning, the agent should be able to Prove to you that they've taken X amount of short sale listings & out of those, how many successfully close & did not go to auction or revert back to the bank.
Banks can & will postpone auctions many times to allow a short sale to go through, but you're agent MUST know how to do this. By now every Realtor out there can talk the talk about short sales, but still the majority of agents do not have a high success rate closing them.
You should stay in the house for as long as you can to save money during the short sale negotiation process & throughout the buyer's normal escrow closing period. Your lender is not going to NOT approve the short sale because you have some money saved.
I have recently closed short sales for homeowners who make over $500K / yr or who have had over $300K saved in the bank & we didn't even get the bank barking about it or demanding 'cash contributions'.
You're not 'screwed' to buy a home again, but be good & stay on time with all of your other creditors after the short sale, then you will be able to purchase again & build up equity from the 'bottom'.
Save my info: If you ever get to a point where your agent is telling you "the bank just won't accept the short sale & it's going to go to auction or foreclosure", Call me, I can probably save the deal.
I don't look back on this same Trulia posting for answers after mine. Shoot me an email directly if you would like to talk about this further.
Emily S. Knell
Realtor Since 1996
Realty ONE Group
100% short sale success ratio
& I can Prove it