JR is right. There are factors other than price. Close date could be a consideration, financing options may be a factor, if someone is putting 20% down as opposed to 100% financing that makes one buyer look stronger than another. Also, sometimes someone comes in with a cash offer which is almost always more appealing to the seller as it would eliminate credit problems that sometimes happen just before closing. If you really want the house, I would consider making a back up offer in case something goes wrong with the current purchase. Just a thought.

Seller doesn't "have to sell" to any one regardless of their bid, even if it's full price or over. In your case, the other buyer's terms might have been better than yours. There are other reasons a seller will accept a lower bid.