Are you buying a "pre-foreclosure" Short Sale? Sorry to ask but some buyers think a Short Sale is the same thing as a property that has actually been foreclosed upon and is now "bank owned". If it is truly bank owned and they failed to notify the 2nd mortgage of the foreclosure they will need to refile the foreclosure action. If it is a Short Sale where the owner (not a bank) still owns it, then there could be other things going on...
With a bank owned....Based on the fact that there were 3 competiting offers on the property you probably have very little negotiating power. If you decide to walk, they'll just sell it for probably the same price (or higher if you got it for a bargain price) to one of those other buyers that missed out the first time.
You can try but I can't offer much hope the asset manager for the bank would consider any concessions for you.
Hope this helps.
You could try to ask for a price adjustment, or you could try to find other ways to add more value, but the seller might balk. What are you prepared to do if the seller were to balk?