When you signed the offer to purchase, you should have also signed an addendum for the short sale. In this addendum, there is a time frame for which you are giving the bank to make a decision. Once this timeframe is up, you can cancel the offer to purchase up to 5 days after the time frame is over. I suggest you look at all of the documents that you signed to see what the entire time frame is in place.
You mention the seller's realtor...do you have a realtor as well that is looking out for your best interests? If you have a realtor, you should get them to explain to you what time frames you are looking at. And, if you don't have a realtor, on your next offer to purchase, I highly suggest that you use one!
The seller technically cannot sell without the banks approval so they cannot fulfill their contractual obligations.
I am unsure why you gave such a short time for response from the bank. Should you decide to do a short sale - unless they have already begun the process with a previous contract - it will take upto 30-60 days on average to get the response and another 30 to close So most short sales can take 45-90 days in total to finalize or more.
My sympathies on your plight. When dealing with a lender on a short sale, it can take many months to get an answer. Why do you want to cancel your offer? Because it is taking too long? You found a better place?
If you still want the property but it is taking too long, and you are dealing with the listing agent and have nobody advocating on your behalf, I would get an agent or an attorney to review your contract to see what your options are.
Let us know if you do have an agent so we can further advise you. Also why you want to cancel. I do a lot of short sales and the short time frame to give a response by the bank was not long enough. That leads me to believe the person who wrote your offer up is not experienced in short sales.
Hopefully if you don't have a valid agreement due to the time for acceptance, you can start all over again - BUT with someone on your side to advise you next time...even on the very same property.
I would suggest that you expand your search and see listed properties, which are easier to deal with. Even foreclosures are easier as the bank wants these non-performing assets off their books.
As a last comment I will also advise if you make an offer on a short sale or foreclosure, to increase the lengh of time for an answer. Florida is the #2 State for foreclosures and short sales and lenders are overwhelmed with paperwork. Giving them an unrealistic time frame just means your file goes to the bottom of the stack.