As long as they do not make false statements that an interested party relies upon (to their detriment), I don’t think it is fraud.
Most but not all banks require that all parties sign something saying that this is an arm’s length transaction and that the buyer and seller are not related.
If they don’t lie and are honest (which often does not require showing the highest offer), then I think it is probably legal.
It is questionable in my opinion but I am not sure your disappointment constitutes illegality.
