You can go under contract with the seller, but still not have an agreement from the bank. Its not final until the bank signs off. In our case, we went under contract July 2, 2009 (the seller accepted our offer) then the package went to the bank. The bank finally did their broker evaluation in August (it has a technical name, but I can't recall what that is) and they accepted the short sale 9/21 (we had word on 9/15 that they had accepted, but no written acceptance). They gave us until 10/15 to close...yeah, right! So we got three extensions...each one was supposed to be the last one (talk about stressful! longest 60 days of my life waiting to close). We closed an FHA 203(k) streamline loan on 11/25.
While we were waiting on the shortsale, we made an offer on another house. My realtor swore I could get my earnest money back from the short sale. I believe her that we could have, because until the bank accepts, the seller can't in good faith argue they are able sell you the house (not unless he had $150K under the mattress, that was the loss the bank took on his mortgage.) Also, she's a veteran and I trust she knows all the tricks (also knows I'm a lawyer and would sue her for my reliance damages in a heart beat if she had been lying to us, just on principle.) But I can't say, since we didn't get the second house and never had to test her assurances.
For us, it was worth the wait. But, MAN, it was an AGONIZING wait. Hope this helps. Best of luck.
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