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We had the exact same situation (they said another offer was higher but we were more attractive buyers), I told the estate agent to fuck off and they were like "oh come on it's only another 10k"
They sold it anyway a couple weeks later but felt good. I dont think we could have afforded the place anyway with the amount of work it needed so turned out ok and we bought somewhere else.
apc
It's tempting in those circumstances to tell the agent to fuck off and die in a ditch isn't it?