First of all...why are you finding these Short sales yourself? That is our job as real estate pros. If you have an agent, you shouldn't need to spend your time trying to find deals on your own. Your agent is right about one thing though. Many listing agents (LAs) list short sales far below market value to generate their own buyers or at least to stimulate an auction effect. In some cases, It has been shamefully lower but I have, in fact, seen it first hand.
1 example recently in south county is a house where the cheapest comparable in the neighborhood was $650K. A LA took a listing where the seller owed the bank $635K and put it on the market at $499K. Listed it on the MLS as Active and then changed it to Sold the same day it hit the market for around $475K. Absolutely shameful.,,,and yes, this agent represented both buyer and seller. Nothing in this neighborhood had sold for less than 600K in the 5 previous years...even homes 1,000 sq ft smaller were selling for over $600K. Even in this market, It would have sold at $599K all day long. This same model had sold for over $800K in the heyday. The LA's regard for the bank was Nil and in other times, would have also caused the homeowner a huge tax loss and additional financial burden. Further every homeowner in that $600K+ neighborhood will now have to deal with that ridiculous sale as a comp to some degree...so many victims from one agent's selfish action.....but hey, the agent got theirs (twice) and the buyer did get a steal of a deal.
So you may get a deal this way but whether you do or not, you could well end up working with an agent who has a complete lack of ethics or morals, The thought of someone like that ever representing me and my financial interests is horrifying. I think you would be better off working with someone who will look out for you and not just themselves. There are plenty of great deals out there. My advise is to just find someone who will work hard for you and be diligent about following through on your offers...as well as finding great properties for you to look at in the first place.
PS On the Short sales that are listed properly, banks are often taking months to shuffle though the offers and accepting them and trying to close them. Short sales are tough, plain and simple.