I don't know what your offer looked like compared to what this seller was asking but...
Some questions to ask yourself when writing an offer:
~How desirable is the home and neighborhood?
~What are the comps (other similar homes that have recently sold)?- Is the home at, higher than or lower? (If the home is lower, you will probably need to offer more than the asking price).
~What is the market like (i.e. are multiple offers likely)?
~How close will your offer's net (i.e. after seller concessions what is your offer worth) to what the sellers are asking? (I find it funny when the buyers agent tells me they are offering 'full price' on a listing but then I read in the contract that they are asking for the seller to pay the buyers closing costs).
~How much do you like and want the home?
I usually encourage my clients to write their 'highest and best' offer on those homes that they love because, as you found out, most of the time, a buyer can not be assured to get a counter and it really hurts them to find out that they got beat by another offer that was within the range of what they would have been willing to do.
Currently interest rates are so low that for every $10,000 offered, the payment increases less than $50 per month. Most people spend more than that for a dinner out, going to the movies or a week of Starbucks, so wouldn't it be a good trade to give up just one of those things every month & get the home you desire?
Also, don't forget to give the sellers desirable terms such as letting them pick the providers of escrow and title services- it won't make too much of a difference for you but it will mean something to them.
Re: this home; if you can make your offer better, do it & have your agent submit it as a back up offer (if they already accept the other offer) because you may get lucky.
Best of luck,