Bottom line is you as a buyer need to have a Plan B. I tend to think like an investor and one of the things investors bake into their calculations are holding costs and repairs. In this case, I'd figure on a week maybe two of the house being empty before move in. In fact, I wouldn't pack and move until the house was empty and I had the keys. Once I had the keys, the first thing I'd do is change the locks. Again, thinking like an investor. And I sure wouldn't plan on moving in the same or next day after closing. At the very least, you want a cleaning crew in there, because short sale sellers have no obligation to leave the place even broom clean. Changing the locks will probably cost $150 and make ready cleaning $200. So you're in $350 plus holding costs during the time the house is vacant before you even start to think about painting and flooring and repairs that are probably needed due to neglect.
This is okay if you've planned for it. So think what would a savvy investor do in this case, and plan accordingly. If you find your offer is high for the risks you are taking, you may want to renegotiate accordingly.
Again I would advise you to speak with your closing attorney.
Typically in a short sale, banks can continue to receive offers or foreclose at any time. Until you have all the bank's addenda signed by all parties, I believe anything goes.
In this case you have approval by one bank but not the other so no solid contract in my opinion.
Once both banks agree and all additional addenda are finged by all parties, you have an enforceable contract.
But again I advise having a real estate lawyer review any documents relating to this sale as I am not an attorney and am simply giving you an opinion based on my experience.