-or - as noted below, it could have been an all cash offer, or you cold have walked in four months into the process of the other one that was being approved. There are many reasons that you missed the boat. It is not becaue of the seller or anyone.. there is no one to blame, the object is to sell the house.
Ditto on what Diane said. Offers are accepted for not only offering price but terms such as closing date and no contingencies. The credit of the buyer is sometimes considered as this has a bearing on whether the mortgage will go through. And yes someone could have offered cash...sometimes translated as no mortgage contingency and not necessarily just a bank check for full amount.
Legally the agent must present all offers to the seller. Not many agents will risk not doing this.
First...sold or closed?? Sold means it has an "accepted" contract. Closed means there are new owners.
Second, was your offer the first one in to the seller or a second offer?
Full answer really depends on both questions.
I have to echo the sentiments and comments of the other brokers who've responded to your question.
There are too many variables and/or "unknowns" here, e.g., contingencies, timing, how long the other party was in the pipeline, etc.
Short sales are very unpredictable and it is the reason why many buyers prefer to avoid them. So many buyers think that a short-sale will result in a real savings. In fact, while a party is making an offer on a short-sale or potential short-sale property, they could be passing up an opportunity to purchase a house that they really could have.
Buying a short-sale property is walking a minefield. One has to be very careful and nimble.
You might be better off dealing directly with a seller who is eager and motivated but not necessarily under water. Or, consider looking at REO (Real Estate Owned) properties where the bank is motivated to sell and the title will be free and clear.