Has the bank foreclosed on the home? If not ,the seller still has the right to sign listing agreements.

Disclosure: Real Estate brokers and agents do not give legal,
financial or tax advice. Please consult these professionals
before, during and after buying or selling any property.
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Contact the agent's broker and find out if the agent has a right to sell contract from the seller.
If not inform the broker what the agent is doing.

Phyllis JC Anderson, GRI
Liberty One Realty
602-316-0115

As long as house has not been foreclosed, owner still signs listing agreement and yes realtor can list home but should have disclaimer in comments that it requires bank approval for a short sale. Hopefully owner has contacted bank and requested short sale packet.

Does the bank "own" the house? If so, the agent should definitely have a contract to sell the home prior to advertising it. If the bank doesn't own the home (ie. they haven't foreclosed on it yet), then the bank has no say in whether the property is advertised.