outbid after application process

My roommates and I submitted an application, application fees and security deposit at the full asking price for an apartment for rent. About 5 days later, the broker calls to let us know that the owner/landlord received a higher (more than the asking as we offered full asking) offer for the apartment and a deposit as well. We now had to "outbid" the second offer by $100 to get the aparment, which we eventually did. I was just curious if this was legal, standard or if we were just played to get a higher rent. Can a broker say that you have to pay more even though you are fully qualified (he ran the app), already had the app and security deposit, because of a higher offer?