To reply to some posts… Thanks for your comments everyone. Very helpful!

You can see the ocean from the bedroom; I was inside it. The list date was 2/5/9 but the home was not entered into the MLS system until 2/8/9, which was Sunday. On Monday 2/9/9 there were multiple offers. Rather than counter them, the seller accepted one offer on the same day. Why wouldn’t they counter multiple offers? In the free market, a bank that acts like that would go out of business.

I still would be willing to bid and allow the free market to set the price for the house. There are not many like it that come on the market, small, big lot, walk to the beach and see the ocean from your bedroom.

My point was not so much about what anyone else may think this house was worth. In a functioning market, the seller would be glad to sell it to me for more than it is worth.

My point is that, in the current climate where banks are getting bailed out, there is nothing in place to make sure they maximize their selling prices on these foreclosed homes. There is no regulation and weakened free market force to stop insider selling.

This is not an isolated event. My realtor just had another client in the same situation and my lender had a friend in the same situation recently as well.