Good explanations below, but I wanted to give you one more perspective. Short Sales are good if you have time and patience. Unless the sale price is PRENEGOTIATIED with the bank and ready to close quickly, you will be waiting anywhere from 1 month to 1 year, with most usually taking 3 - 6 months.
I had one Short Sale approved within a week ( I couldn't believe it either), and I had another one take about 10 months. Needless to say, you never really know how long it is going take, the bank makes all the rules and takes their time in negotiating, because most are overwhelmed.
The good points of a short sale? The homeowners usually remain in the home and take care of the home while the process is ongoing. They want to leave the home in good condition so they don't have any issues with the lender. So you get a home usually near foreclosure prices but without as man repairs.
So ask your self, do I have time to wait, usually without any answers for weeks or months? Do I need to move immediately? Am I willing to wait for all of that time and possibly have the bank NOT approve the deal?
I would go see the home and ask the agent to see if the Short Sale was prenegotiated. If you love the home and are willing to make an offer, and the wait becomes too long, yes you can cancel. SO really it is the best of both worlds.
Feel free to contact me if you are not working with an agent, we are the number SHhort Sale company in mIchigan.