Make it a win win for everyone and everyone will be happy.

Sacrifice for the why and go out there and win!

This is one lesson that I'll bet that you don't forget.

At the auction, there is spirited bidding, and the winning bid is $20,750. 

I've been a software developer for 17 years specializing in Microsoft technologies and have my BS degree in Information Systems.  15 years ago I started learning about RE investing from a co worker that was embarking on this journey, and I read books like Rich Dad Poor Dad, Cashflow Quandrant, Total Money Makeover, How to Win Friends and Influence People, and other various "motivational/self-help books".  

I am willing to bet that if you give him half a chance without being too hard on him.

You want to make sure the seller knows your intentions for the property going in so there isn't bad blood at some point during the whole transaction; but these transactions can work out to be very nice win-win scenarios for both you and the seller at the end of the day. 

So on that score, frankly it was a win-win for everyone.

If I am the winning bidder but do not " like" the contract, can I back out?

If lender cannot seek liquidation of collaterals securing loan and no one is up to wasting money to open probate in order to have standing, only to facilitate a no-win short sale?