We are not a young couple able to house hack (read 2.5 kids, 2 dogs, 20+ years of married family living) but we do have experience in rehabbing, know our area (one of us used to be a real estate agent turned software engineer loves analyzing a deal), and have a bit of cash reserves (not enough to not require financing).

I thought it was a misprint or maybe a physician's loan, but when I called the lender they confirmed.

Then in most cases, the sale has to be confirmed in the court with anyone allowed to overbid.

when i called the agent he confirmed my suspicions but said they had a full price offer from someone out of state. 

If I were you, I would request a copy of your credit report from ALL THREE credit bureaus to confirm it's not appearing on any of them. 

Say $200 for the reserves+$90 for taxes and insurance=$290. 20% down and if you can find a lender loan on such a small amount.I used 4%.

You can self pay T&I for residential mortgages,  but not for commercial loans, I dont think - commercial side is pretty conservative right now as they are ALSO asking for anywhere from 9-18 months of PI,TI reserves too!

Is it confirmed?

I would also need $50K in reserves and show proof that I either bought or sold 3 properties in my business.

That's where adequate reserves become critical.