I am cautious about making offers on more than one house at a time, however, because if both offers were accepted, then you would lose your deposit on one, or even be sued for specific performance. You might be able to cancel on the basis of the inspection since short sales are almost always sold "as is" with right to inspect, but you are taking a chance that you would not be able to show repairs required by a professional inspector. This depends on the wording of the Purchase and Sale Contract, of course. Anyway, we agree with your Realtor, it is still risky to place more than one offer at a time. Good luck
Jay is right on. If you used the short sale addendum you may withdraw your offer at any time. In other words, if you find a better house you can sumbit an offer on that house as well and withdraw the first offer.
I am assuming that your Realtor has explained the Short Sale process to you, and sometimes it can take weeks for a final answer from the bank.
Did your Realtor put a clause in your offer giving you the option to withdraw your offer at any time prior to final acceptance by the seller's lender? This is something that I have done for my Buyers in the past.
I'm not sure about your State Real Estate law, so will not comment on your earnest money question. You probably want to discuss your options with your agent.
Wishing you all the best!