Yes, this was fair and Cindy is correct. The agent representing the bank (or Realtor if it was a Realtor) is responsible to the seller, not buyers.There are often bid periods on these homes that are dictated by the seller but the bottom line is that they have the right to sell to whomever they want if it means a larger net or an easier sale for them. If the property seemed to need a lot of work to fix it up, as you mentioned, then possible it would require a 203k or investor type loan or cash to purchase. Real estate isn't like buying an item off a store shelf, - it's a product that is put out there to procure the highest offer at the best possible terms for the seller/owner.
Stay connected with an agent/Realtor who can represent you and have the process explained to you upfront and go over a few scenarios with your agent on how the whole thing can play out. Good luck and I hope you find what you need!