So want did you do? What happened and where are you within the Short Sale process?
The $1,000 good faith deposit was going to happen, it shows you have interest in the property and gives the homeowner some form of verification that you are a true buyer. Since there is actually no accepted offer there is no reason for you to tie up any further money and I hope you did not.
Did you speak to the Realtor or Attorney involved and make sure that you are not going to be charged for any service if the bank does not accept your offer?
Please give us an update!