Sadly this can and does happen.
When I work with buyers and we are submitting offers on short sales I stipulate REAl clearly in the purchase agreement , that seller is not to submit any competing offers to the bank if they accept our offer.. Although seller retains the right to accept "BACK UP" offers.
If this was not stipulated in your agreement , the seller can and sadly at times will submit competing offers to the bank.
Best of luck to you!!!
Kawain Payne, Realtor