I am a buyer and am wondering what options I have in dealing with trying to buy a short sale.  There is only one mortgage on the property.

House was listed 3 months ago for $499k.  They had several offers on the first day on the market and another party had a better offer and it was chosen.  A few months later the house came back on the market.  The listing agent informed us of the offer that was denied and GMAC's counter at 475k.  That was too high and the original buyers walked.  We decided to put in an offer higher than the original one from the party the walked.  We put in an offer of $436k as-is and pay all closing costs.  We submitted the offer with comps in the area showing that none of the houses in the neighborhood sold for that much in well over a year.  Even the house next door sold for $455k in March and it is on a much larger lot and is a much bigger house (1,000 sq ft. bigger).   A week later GMAC's negotiator declined the offer and said $475k is their rock bottom price due to the BPO.  The BPO is roughly 3 months old when the original buyers submitted an offer before walking.

I am wondering what options we have now?  Should we request a new BPO?  Should we dispute the existing one?  What about accepting the $475k offer and making it contingent on the appraisal? 

Recently the house received an auction date on December 11th.  At this point I wouldn't mind it going to auction as I would pay cash for it.  But I am concerned that if I walk now, the house will be picked up by somebody else who might want to pay $475.  It is unlikely but it's in a desireable neighborhood and is the last one for sale in the area. 

Thanks in advance for any direction.