The best person to answer this question is the Reator that wrote the offer for you. The terms and conditions within the offer will dictate how long you "MUST" stay in this waiting stage. In most cases you are bound into the contract for a certain period. After that time frame you may or may not be able to withdraw the offer and move on.
The sellers bank is under no obligation to accept a short sale although in most cases it is in their best interest. Some banks will respond in a week or so. Others may take several months to decide if they will accept or reject the short sale. Often a seller will accept several offers and their bank will choose which offer to accept. Short sales are not for the weak hearted. It is true that you can get a good deal but you have to ask yourself if the wait is worth it.
You can always continue to look at houses. Nothing is stopping you from doing this but, DO NOT write an offer on any other properties until you are fully released from your existing transaction. Doing so may put you in a situation where you will be bound by 2 contracts. This could get ugly!
Good luck in your transaction. I hope it all comes together for you!... more