Legally it's negotiable, however realistically here is what happens most of the time....
Usually, the listing agent will be working with an escrow company that assists the listing agent / seller in getting the short sale done. What does that mean and why you should care? The escrow company assisting the listing agent is preparing forms called a HUD 1 to sendoff to the bank so that bank understands the monies involved in the sale. When I list a home for SHORT SALE, while the escrow could be negotiated, for me I want to work with an escrow company that is successful in getting short sales closed. You would be surprised not all escrow companies are the same. Neither is anything else for that matter. Using a successful escrow company is important to getting a deal done and a short sale listing agents knows this is paramount.
You brought up the point the owner / seller may run away with your money.
Well In California Escrow does not work that way. Escrow does what is mutually agreed upon by both buyer and seller. one party can not tell escrow hand me the money and run off with it. that is why there is an escrow company. Escrow is a neutral third party that both parties entrust to handle the deal. Your contract is in fact your escrow instructions. The escrow company reiterates the contract and has you sign escrow instructions.
What you might want to do is,... make sure the escrow company is a neutral company as in NOT TIED TO THE LISTED AGENTS BROKERAGE they are usually next door ect.
I use a Neutral party escrow not tied to any brokerage. All of them claim they are, but most are not.
Harold Sharpe - Broker
So Cal Homes
California Department of Real Estate Broker License # 01312992