Yes, it's ethical. And, sure, it's normal.
Why would the seller do that? Easy. A bird in the hand is worth two in the bush.
Besides, lots of times potential buyers say they're putting in an offer, and never do. A few years ago, I was selling an inexpensive manufactured home, and I had 3 or 4 people who absolutely swore that they were going to buy it. Absolutely insisted. And none of them did.
Imagine that you're the seller. You've received a good offer. It's in hand. You say nothing. He accepts. What's more normal than that?
Let's say you'd piped up and said, "Hi, we're interested, too. We'll work with our agent tonight to make you an offer." In that case, the seller might have said, "OK. So long as I have it by 8 am tomorrow morning." But the seller is also thinking: "Maybe these folks will re-think and decide not to make an offer. Maybe they will make an offer, but it won't be as good as the one I have in hand. Maybe these buyers aren't really qualified."
So it's not clear that you even said anything. If you had, you might have had a shot. Or maybe not.