Absolutely nothing has changed for the better with banks and anyone who thinks otherwise simply doesn't deal with them as regularly as I do.
Bottom line though, if the seller signed your offer and the bank has given you the approval letter, you are in contract and have legal rights. You may want to talk with a good real estate attorney.
Short sales are diffiucult and they often take longer than the origonal contract time frame. I personally have a short sale that has been going on for over a year now. It is a complicated process, and unless the realtor on the other side is doing something shady like submitting other offers, against the contract terms, it will probably be fine.
If you know that the bank is trying to get out of the contract because in fact more people are willing to pay a higher price, I would move in a different direction. The contract is a legal binding document, but; until the bank sends a leter of intent, it is not an official deal.
I would work with you agent and make sure they know your frustrations and see what they have to say. An agent in the short sale process should be able to verify what the issue is and they should be honest with you about. it.
Neil G. Blair-Bennett
Sellstate Achievers Realty Network
Rossman Realty Group, Inc.