I have had buyers with higher offers declined as well. Most of my clients are FHA and we ask for the 3% contribution but if we are competing we roll the closing costs over what we feel is the highest offers out there so the banks bottom line isn't affected.
The other factor others don't take in to consideration and I wish it wouldn't happen but it happened to us in this case...the buyer that beat us out was the listing agents client as well. They pushed their deal through and we can't confirm bank ever saw our offer. Our offer was $3k over asking and it sold for $20k under asking. A big deal to the banks bottom line.
I have to call on every home I prepare to show even if it shows active and "interview" the listing agent. Some out there are forgetting our code of ethics.
Also, there are multiple offers on every home at your price point in many areas. For example in Buckeye and other more hard hit areas there are an average of 6 buyers per available property!
Keep in mind the moratoreum on foreclosures has lifted and while banks are doing more to keep people in their homes there will be more coming on the market and you will get a home that can be yours.
The key is identifying who you are dealing with on the other side of your transaction, getting to know how they work, and prepare them for you offer (quickly these days as they don't sit long if they are good deals) and have a cover letter that bullets the bottom line to the bank so no one has to figure anything out! Simple and basic, clean and quick are the ways to go.
Best of luck Shane. You will get what you want
Keller Williams Arizona Realty