The short sale was already approved by lender and we bid $10,000 over so there shouldn't be a problem should there?
That approval means nothing. Your high bid means nothing.
Until you have something from the seller's lender in writing that your offer has been approved DO NOT spend any money.
Even then the deal can die. We just had one where the lender approved our cash offer and a couple of weeks before closing they foreclosed on the property. Our buyer then went and bought the house on the court house steps for $20,000 less than the approved cash offer.
Do not expect any logical thinking in this deal.