In the present market of "multiple offers" on almost every property due to lower inventory, sellers (banks, lenders, servicers, etc) can & will look at the lowest risk/highest return/shortest escrow offer that's on the table with many to choose from. A year ago, your offer would likely be acceptable but with the way the market has turned, these sellers are again holding the cards as demand vastly outweights supply & they are going to take advantage of this present market as long as possible. As many other have already responded, they own it & it's their choice as to which offers looks most attractive. It is not an issue of discrimination but more an issue of timing. I constantly get calls from selling agents & buyers who vent their frustration with what;s going on. It unlikely to change for sometime but might improve for buyers as a higher number than has been of foreclosures should come on the market in the next 3-4 months that all of us who have been doing REO's have expected with the moretoriums coming of age. No one knows for sure what the numbers will be but the projects appear to lean in favor of a substantial increase in inventory, which should help buyers have a bit more leverage.
Unfortunately yes the seller can and often will take a lower offer because it's cash or a larger down payment conventional loan. The only difference between an FHA, VA or USDA loans vs. conventional loans is the appraisal. There's a misconception that FHA and VA loans take longer to close. Totally unture. Sometimes FHA and VA close faster. Also, FHA and VA have much more flexible underwriting guidelines than conventional, so in my opnion, conventional has a greater chance of not closing, especially if conventional
I have found out the hard way that USDA loans often have the same condition requirements as FHA or VA loans- so if the house is not in livable condition, or even if it needs some moderate work done, it stands a likelyhood of not passing appraisal anyway- so the property would be tied up, unavailable to other buyers if that is the case, until repairs are made- and banks don't usually do repairs.
Sellers always have the option to decide which offer/type of financing that is acceptable, just as a regular seller does.
As to what was implied- then if that was the case, they wouldn't trust veterans who were using their VA loan eligiblity, since VA loans are 100% loans.
Hope this helps!