You have some great questions, Michelle.
The underlying bank that has the mortgage for the property you would consider is a very big contributor for how long it will take, and whether it's possible to even get an approved short sale. To give an example of one bank's time line, Countrywide has in it's guidelines, 15 business days from appraisal (after the appraisal has been completed and is available at Countrywide) to simply assign a negotiator. Once assigned, that person has 15 business days to consider the entire package, and if approved, submit the package to the underlying investor, for approval. The investor then is allowed up to 6 weeks to approve the deal. That's 12 weeks. Believe me, it isn't fun for anyone involved.
Other banks are faster, in fact, nearly every bank is faster. However, I once needed 45 days, just to get my first phone call back from ING Direct.
As to the listing price and how it might be considered bait and switch, if you are considering a buyer's agent, for the purpose of buying a short sale, be sure you find one that is personally experienced in short sale transactions. Your agent needs to know how to do a short sale comparative market analysis, to be sure you aren't being "used".
Are the houses sold to someone that knows the system? A house you make an offer on, may get sold to someone else, if your agent doesn't do everything she can to protect your offer, and ensure your offer is always the only offer the bank is considering. There are tactics and techniques for doing that, and the agent you use better know a thing or three about how to protect you and your offer.
Do REALTORs streer people away from short sales? This depends. If there is an easier transaction, for a similar property, I will always have the discussion with my client about what a short sale entails and then let them decide. Most of my clients right now are owner occupying the home, and can't dream of waiting at least 3 months to find out if their offer is accepted. An investor will likely wait. Is a short sale worth the hassle to the agent? I'll be honest and share with you that my commission is always an issue with the bank for a short sale transaction. That means that I'm unlikely to earn the same commission if you close on a short sale (at the same price), as if you close on a non-short sale. I fight hard for my commission, but it is indeed always an issue, and frankly, something that is frustrating to have to fight for.
My advice to you, is that if you are searching for a home that has foreclosure inventory available in the same area, that you'll probably get just about as good a deal buying a foreclosure as you would a short sale. Condition might be a tad worse, but with enough work, you'll probably get close, and when you make an offer on a foreclosure, you'll probably get an answer back within a few days. Then you can expect to close in 30 days or so. Basically, it's a standard length of time. If there isn't any foreclosure inventory (which is the case in many highly desirable areas), a short sale purchase is indeed the best way to purchase a home at the best price, so it's worth the effort. Just make sure you the right buyer's agent on your side that knows how to protect you and your offer/transaction.
FYI, just in case you might be looking in Anthem, I'm listing 3 short sales in Anthem right now. I also know an absolutely killer deal on a short sale in the Biltmore area...just to name a couple of choices.