Bidding on foreclosures is very different from bidding on traditional sales. There is no opportunity fo countering. You give them your highest offer first because you may not get a second opportunity to do so.
Whether or not you raise your price will be determined by the value of the home, as well as your desire for this particular property. There is no right or wrong here - do what's appropriate for you.
That is standard practice for some servicers when multiple offers have been received. Its actually, very clever, because the expectations going forward, are that only serious bidders will remain, and they are likely to get their asking price (or even higher than that in many but not all cases).
Most people new to bidding on foreclosures assume they are going to get a bargain, but if the area and property are even moderately sought after, most likely, the property is going to sell at fair market value and not a dollar less--assuming there are no serious repair issues.
NMLS # 6395
Financing Kentucky One Home at a Time
Some of your question is cut off so I am not sure what the rest of you question was, but as a guess... Were you gonna say the bank wants everyone to send in their "highest and best". That is pretty common in a multiple offer situation. You have the choice of staying in and standing firm with your current offer, removing your offer, or improving your offer. If this is not what you were going to ask, please call me. I can explain further, 661-809-3388
If you are working with a Realtor, contact them and ask what they recommend on that specific property. They can tell you what the comparables in the area suggest the most reasonable price will be. They are working for you, you should be asking them directly for advise rather than posting on Trulia!!