One of my biggest frustrations in the industry right now is when agents don't properly explain and manage the expectations of buyers.
It is not possible to, "withdraw," from a contract. Now, if the proper protections are built-in, one may be able to, "terminate," a contract, but that can not happen unilaterally. Thus, it would require all parties to agree.
So, while I would never advise someone to potentially be in contracts on multiple properties ... I would first encourage that they are written correctly to begin with.
As you can see from the other answers you can have purchase contracts on more than one home.
However, you want to think seriously about the strategy, including what office(s) have the properties listed.
For example, you may have a purchase contract on a short sale with a large listing office. Then a really desirable privately owned home comes on the market with the same listing office. You want to buy that home but you think there may be multiple offers. The fact that you already have a purchase contract with that brokerage may come back to damage your position on the privately owned home.
If you are working with a "designated buyer's agent" in a large office like that the broker becomes a dual agent and there is no telling what impact that could have on your negotiating position on a second home. (In Ann Arbor all the larger offices are designated agency offices. This is not the same as buyer agency where the brokerage and all agents represent you.)
It can get complicated, so take the time to think strategically before you make that second offer. It can sometimes make more sense to withdraw from the first offer first.
If not, then you must be very vigilant and withdraw two offers immediately when one of them gets accepted. If you are too slow you could be in trouble. In your case you are dealing with a bank, so the chances of them accepting your bid quickly are slim to none, so you probably have time to withdraw the second and third offers.
One solution might be to include language in your purchase offer that you agree to forfeit your earnest money deposit as liquidated damages if you fail to close as agreed. That way the seller is on notice that he will not be able to go after you in a lawsuit for specific performance at a later time.
As far as making multiple offers, if you want to purchase more than 1 house at a time, make multiple offers, if they both get accepted at the same time, you are on the hook for buying 2 or more properties and can be held liable, you always want to withdraw your offer before placing another.
As far as the short sale process, once your offer is submitted, the bank has to assign a processor, the listing agent has to furnish a proposed hud, a net sheet, all the sellers financials, the buyers pre approval letter and a copy of their own bpo. The bank takes at least 2 weeks to process this, then assigns a negotiator, they will order at lkeast 1 appraisal and maybe a nother bpo as well, it takes 2 weeks at most to get these back (we are laready past your 3 weeks( Once everything is back to the negotiator, they assess if they have everything, if not they have to go back to the klisting agent for more info and if so, it usually takes 30 dasy for a decision, now this is best case. If the seller as private mortgage insurance or the loan was a fnma or freddie mac loan, they need to approve teh short sale which could be an additional 30 days.
Best cases are 2 months, average is 3 months and if everything is not sent the first time, it could be 6 months, so your 3 weeks is not enough time for a short sale.
Check out my blog
TIPS ON GETTING YOUR SHORT SALE OFFER APPROVED