It sounds like you're new to buying a home. Congratulations. It also sound like your real estate agent has been remiss in explaining to you the various things that go into an offer and why a particular offer may be better than another.
There's no law requiring someone to accept the first offer. In a multiple offer scenario, seller's must choose the one that looks strongest and the one they like best. What makes an offer strong or best? Here are a couple items for thought:
- Cash. An offer that's all cash is better than an equivalent offer where the buyer requires financing. Why? Because financing is not guaranteed. As some people are finding with the government shutdown, if there's an agency that needs to sign off on your mortgage and they're shut down, then you can't close and the deal falls apart. Even if all offers use financing, more cash is a stronger position. If someone is getting a loan to buy the house by putting 20% down while another person is only putting 5% down, the 20% down party is seen as the stronger financial candidate. A seller's goal when selling the house is to get paid, preferably sooner than later. Having a buyer fail to get a loan and restarting the whole process costs money.
- Connection. Like it or not, connection to the buyer can make a difference. Not a personal connection as in the buyer is known to the seller or their agent, but a connection like the buyers are a young family (and the seller is also a young family or bought the house when they were a young family starting out). This is why some agents will suggest a buyer write a cover letter. This introduces the buyer to the seller and gives you an opportunity to forge that connection with the seller.
So, what happened in your case? Hard to know. Without more information on the details of the offers, you are just speculating, and poorly, on what could have happened. There's many other ways things could have gone down, which are completely normal and expected, than the one negative way you've happened to suggest.
Some other things to know:
A strong connection between the buyer and seller's agent doesn't mean there was fraud. Agents typically work under a broker. A particular real estate organization can have many agents, representing buyers and sellers at the same time. So, agent A who works for X real estate co may be the seller's agent and agent B, who also works for the X real estate co may be your agent. That doesn't mean you're going to get some advantage over another buyer. You can be sure, if another buyer is offering cash and your offer is contingent on financing with 3.5% down, you will lose out, regardless of the connection between yours and the sellers agent.
Sellers will delay on responding to offers to get more. Think about it. With one offer, you don't have a sense whether you've priced things too high or too low. You also don't have an opportunity to hedge against the risk of a buyer being able to secure funding for the home. Multiple offers increases the chances you'd get a higher amount for your home and get buyers with different risk profiles. If the offer deadline gives you time, why wouldn't you wait to see if you get something better?