At one time short sales were done infrequently. In recent years they have become more and more a common way for a seller to sell there home. If you have a home that is underwater and you have to move or cant afford it then this is a great option rather than walking away from it or just giving up and letting it go into foreclosure. The process to market the home and get an offer is similar to doing a traditional sale.

1. Find an agent that knows short sales http://www.ChucksHomeRescuePlan.com
2. The agent lists the home for the current fair market value. - It's important to note here that the banks go off of the current value of the home not what it is you owe them.
3. You gather all the paperwork that the Realtor will need to send to the bank for the short sale department. - This is often the most annoying part for the sellers but can kill a short sale quicker than anything. If the bank is missing one item it stops the entire process in it's tracks. Items needed may vary but usually consist of 60 days bank statements, 30 days pay stubs, Hardship letter, monthly financials showing what comes in and what goes out. 2 years tax returns.
4. Once an offer is received the packet is put together by the Realtor and sent in to the bank.
5. The bank assigns a negotiator that will order a valuation of the home from a third party. It can be just another CMA from a different Realtor or a full blown appraisal. This is the value that the bank will use to determine if the offer is good or not. 30 - 60 days
6. Once the value is given to the bank the negotiator sends it to the investor that owns the mortgage to see if t meets there criteria. If the Realtor and negotiator are on it then it should be approved or at least receive a counter.
7. If the offer is accepted then the bank will send an approval letter to the listing agent. This letter will give a close no later than time that everyone needs to meet, usually 30 days. This is also important because the bank many times will put in the approval letter that they are waiving the right to pursue any deficiency. That's a good thing. You have to talk to your CPA about all the tax stuff.
8. At this point the dates in the contract go into effect such as inspection, loan, and appraisal deadlines. Usually short sales are sold as is. The inspection is for the buyers peace of mind.