The approval may come down (within any time frame) but the seller may not agree to the terms and then you have a deal that is over.
There is no specific time line for short sales. The lenders are under no obligation to approve a short sale. There was a law that was passed requiring a short sale decision within a mandated time period, if I remember correctly the new mandate takes effect in July. However, this law as with most of the madates that have been passed will only delay a market recovery and tighten lending restrictions. It will do little if anything to help buyers, sellers, or a market recovery. If lenders have not had substantial time to determine if the short sale is in their best interest when the deadline hits they will simply turn down the short sale and the sellers' would have to start the process all over again from the begining. Just my opinion. Short sales by their nature are time consuming. The sellers' are asking the lender to concede large sums of money. The lenders' loss mitigation departments are usually overwhelmed and understaffed. Decisions often require several reviews before and if a final approval is given. Hopefully, you will be kept informed and updated and everything works out for you. Good luck.
You and your agent should be aware of how many liens are on the property. They will be listed on the preliminary report. One lien is not too hard. Many liens, such as a second mortgage, HOA liens, judgements, etc. can mean long delays. Also, large liens also could be a red flag of a long wait, or the sale not being completed, at all.
I do not know of any laws that force the banks to be faster. Only, that your deposit would be returned, if the sale is not completed, within the contract specifications.
Don't shy away from short sales. But, do be informed. And, ask questions.
Wardley Real Estate