I'm sorry to hear about your situtation. Since you're in Minnesota I would recommend that you contact the Minnesota Home Ownership Center. Check out their website at http://www.hocmn.org. Even though you aren't the home owner, you're involved in the foreclosure process and they have people who can advise you of what you're options are at no cost to you.
Best wishes to you.
Are you sure the listing says "subject to third party approval" instead of bank owned? If the sheriff's sale hasn't occurred yet, then I find it hard to believe it is bank owned?
If you seek advice on what to do, please contact an attorney. No real estate agent in this forum should be giving legal advice for we are not attorney's.
If the property is going through a Sherriff's Sale in May, the Seller will generally have at least 6 months to redeem the mortgage and you can stay in your home during that time. It can be as little as 5 weeks if the property is abandoned or as much as 12 months under some circumstances (primarily acerage and land used for agriculture).
Your lease is still in effect and yes, you still have to pay your rent. You do not have to move out just because the property is listed on the market. However, if you lease has or will expire soon, your landlord may not wish to renew it.
As far as offering to purchase the home, chances are that your landlord owes much more on the property than it is worth and they do not have to accept your offer. In fact, any offer has to be approved by the lender in a short sale.
This will not become a bank owned property until the end of the redemption period and your landlord still owns the property. If your landlord is trying to get some sort of mortgage modification, then she may not be motivated to sell.
Sounds like a short sale to me.
Your most reliable sourse for accurate information may be the listing agent. Since this property seems to be in transition it's possible that you could still be speaking with the owners agent as opposed to the banks's representative.
A first step may be to find out who the agent represents, the bank or the owner. If the MLS information indicated the property is "bank owned" it would be fair to assume this to be accurate. It is best to varify this and proceed from there. They will be able to best advise you.