The answer is absolutely yes and to be told that it is not, bank approved or otherwise, is just not good advice. It's the kind of advice that some double ending listing agents give a buyer who calls on their sign.
Seller's nor their agents nor the banks determine sales price - the market determines price. Homes will sell if the price is right. So if the bank's approval is above the what the market is willing to pay, the house isn't going anywhere. They may approve what they may like to get, but that doesn't mean the house is worth that amount. Really, the seller's negotiator has some work to do to help the bank see what the magic price point is.
You have to determine for yourself what you think the house is worth and make your offer based on that. The bank approval maybe right on - it may be way out in left field. If a another buyer is willing to pay more than you are, then don't sweat it and move on to the next house. Bottom line, you need to know your market and be confident enough to know when the bank and the listing agent for that matter is out of line.
Lastly, different banks deal with short sales in different ways. in some cases, short sale approvals expire - so a new offer means a new negotiation.