Housing.....why do we need it anyway?

So since my last post about the housing situation more has happened.

The following Monday our landlord called and wanted to talk about selling the house we are renting to us. It is a great house. And we have talked to him in the past about the price he would be willing to take for it. But it was always higher than we really thought it was worth in the current market. He has been dumbfounded about how low the prices in the neighborhood have dropped. So he found out some information that is part of one of the real estate recovery programs the government is trying to introduce. The one he is trying to do would pretty much make up any loss he has had on the house since he had to move on orders in 2007.

Our real estate agent, who also happens to be his agent, does not think the package will apply to him. His rank is quite high and he makes a lot more money than most military people. And these packages are designed to be VERY hard to qualify for. So she thinks he will either have to do a short sale or find someone else to rent after we move.

So as the government finalizes the rules, they should be out mid-April we decided to keep looking. And if we found something fabulous we would move on it no matter if the landlord sale thing would work out or not.

So I went out again to a house that I had tried to look at before. The day before we were to go to Great Wolf Lodge we went to see this house. (it is house number 1 ) At that time we couldn't get in to see it. There was no lock box on the door. So my agent called the listing agent, and only got the office and was told a variety of lies about why there was no key on the house. So she ended up threatening to report them because to have a house listed on MLS without a lock box is a $1000 fine. So the listing agent promptly took it off the market.
We went on vacation and came back and decided to keep looking. Our agent sent us a bunch of new listings to look at, and the same house was there but for $40,000 less than when I tried to go and see it before. SCORE!!
So we went to see it, and it is great!! It really fits our family's needs. 5 great size bedrooms upstairs. Fully finished basement, three car garage, great storage and more. It is not super fancy inside, I think the poor people who originally built it spent all their money getting the size, with all the bump-outs and additional rooms, that they did not have enough to finish it really nice inside. But the finishing touches are easy to do and will not cost that much.
So we put in an offer! That next day we submitted an offer for 12oo over list with extra so we could ask for closing costs. Essentially we offered 14000 more so we could get the 14000 back for closing costs.

So today, we get a call. There are multiple offers on the table. Give us your best and highest by 11PM. So now we have this huge dilemma. What the heck to we offer. We have no clue what anyone else has offered. We don't even know how many other offers there are. The bank said specifically that they will take no escalation clauses. So that really sucks! (an escalation clause says, "we will beat your highest offer by x amount") So we wouldn't have to pay more than absolutely necessary. But they won't do that. They want absolutely as much for the property as they can get.
So we are just sick. We really, really want this house. But don't' want to pay much more than we originally offered. We could just say, our original offer was our "best and highest" and just see how things go. But I think if we do that, we will lose it! ARGH!!!
The comps in the neighborhood are all over the place. And the tax assessment is for $140,000 more than we offered. So there is lots of up potential.
Man, I don't know what to do!!
I need to talk more to Rob, right now he just wants to say, our first offer is the highest, but then there is no taking it back, no second chances! I don't know what to do!!