If you wrote your offer with an appraisal contingency, and it does not appraise, you can walk away or ask for a price concession.
Shorts sales are a different animal however, and their unpleasent nature has been well documented on this board. It seems to me that the bank would rather take posession than approve a lower offer, but who knows.
For me, with normal offers, I always worry about appraisal, but if it does not appraise, and if the seller refuses to adjust the price accordingly, I can walk away. You can do that with the short sale too if you had it as a contingency.
