What to Believe

I made an offer on a place in Sag which was 17% off the ask price (in the under $1M market). My agent put it through, and we never heard anything back from the sellers. We then hear that there is an agreed upon offer, however, they can't let us know the price.....yet, we are encouraged to raise our offer to within 5% of the asking price. What a joke. We walk away.... Recently we have revisited, and have been told that there is still an accepted offer, but no contract, so we still have a shot. We are considering raising our offer slightly, but not sure who or what to believe anymore. This is my first time dealing in east end real estate...and quite honestly, the discussion on the boards has me concerned. Please comment. Thanks.