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You have entered the 'wild, wild west' of real estate. For every perceived notion that rules exist, there will be real world exception that these rules don't apply. Taking this journey without and advocate on your side is not advised. Secure the services of an experienced real estate professional and/or an attorney. Your adventure is about to begin.
You really should have a Buyer's Agent represent you in purchasing any home. Especially a short sale. Short sales can be some of the best deals you will find. Banks are following guidelines as to what percentage of market value they will accept for a home. In most cases, the Seller will accept any offer to start the short sale process moving. The bank, as Margaret indicated, will have an appraiser or other Brokers in the area prepare a BPO (Brokers price opinion of value) Once the bank determines value, they will counter with a price within guidelines or accept your offer if it meets their price requirement. A Buyer's Agent would have explained the process to you and you would have known that the full price was way below market value. Your agent could have given you a range to expect to pay for the property at the time you submitted your offer. This would have been valuable information to you and could have either prepared you for reality or you may have decided to offer on a different property. It is legal since the sale was contingent upon the bank approving the sale.
See what can be done to resolve with the listing agent. Good luck!