Yes, the bank can do whatever it wants. The bank is not obligated to accept the asking price. However, since another buyer walked away, I would be fairly certain you will get a quick response and the bank will not counter higher.
I suggest speaking with your agent (hopefully a buyers agent) about your offer. Short sales frequently take months while the bank decides (keep in mind, they may try to keep their books balanced by allowing only so many losses during a quarter)
If, the sellers signed and completed the offer, then you should only be waiting for this contingency to be accepted, but only your agent can explain this to you completely.
Jen, until you get signed documents back from the bank, they can and most likely will accept an offer that is better than yours. In a short sale or forclosure deal the banks want to maximize the return on their investment. With so many homes avaible, unless this home is THE very best, I would consider others.
We were approved at the bank, and are waiting to find out if our offer is going to be accepted. It is a short sale and I am hearing a lot of horror stories. Can our offer be accepted and then rejected if somebody else offers more?
I am not sure if you are asking about an approval for the sale of a bank property, or a loan approval for a buyer.
I have seen banks change course in the middle and even near the end of transactions of bank owned properties. The language in their contract clauses usually gives them a great deal of latitude about contract performance. The ineptidude of banks and their dismal record of follow-through is a sad chapter in American real estate.
The loan approval process is tricky right now with lenders verifying employment multiple times and issuing "conditional" loan approvals that give them lots of leeway to change their minds about lending money to a buyer.