Is this Short Sale Dead?

[J Johnson]

My brother and I made a SS offer on a property that is listed with a real estate agent that has SS experience. Supposedly, the seller and listing agent have been working the SS for a few months...the property was previously under contract with another buyer that backed out due to time constraints. The agent has supposedly recieved a verbal SS price from the bank, but no written acceptance. The seller has a 100% loan with no equity, so the bank will take a beating. We have not deposited any earnest money nor conducted any inspections, so we have zero dollars in the deal.

Today, I learn that the property has a July 1 auction date. What should we do at this point?

-Cool our heels and see if the bank approves the SS before the auction?
-Contact the attorney handling the foreclosure and try to get a deal?
-Contact the bank directly (local bank) and try to get a deal?

Thanks.