Your offer to buy a short sale is pretty meaningless if the bank does not accept the offer. They don't have to and it looks like they didn't. Often the bank moves to foreclosure which ends in a trustee or sheriffs auction. The question is was the owner notified. Usually the trustees know what they are doing these days since these have gone from something new, in 2007 and 8, to very common today so I am guessing they did what they needed to do. That usually included nailing a notice on the door, sending a certified letter (and no one has to accept it just has to be sent) and ads in the newspapers. If they did that then the owner was notified. It is well know that many short sales never sell and it sounds like you are now aware of it as well. Move on.