Legal Question in Real Estate Law in California

I'm confused by your post. Are you referring to a trustee's sale, commonly called a nonjudicial foreclosure? In other words, were you bidding at a foreclosure sale? Or was this a short sale?

First, I assume you refer to a bank selling a house it already owns, rather than a bank's trustee selling a house under a trustee's foreclosure sale process.

In selling real estate it already owns, I believe the bank has a reasonable amount of discretion in how it conducts a sale, including the right to negotiate with offerors after the offers are opened and reviewed. I suggest you go back to the sale announcement or instructions for giving offers to see what it says about negotiations with offerors after the offers are made, if anything.

Of course, the bank cannot increase the amount of someone's offer, but very likely it can ask one or more offerors to increase their offer(s) if the bank is unsatisfied with the highest offer as made.

Generally, I think the rules under which the offers will be received, reviewed and accepted (or not) will be published somewhere before the selling process is opened. And, I think it's likely that the bank reserves the right to conduct further negotiations with one or more offerors after reviewing the offers made.