What you describe as "insane" also describes the market last spring and summer in...Chilliwack, BC.  Bidding everywhere, and we were caught in it.  Our bid was dismissed out of hand because we had the temerity to put a condition on the sale (did the house have a crawl space or not?  Past RE records answered both "Yes" and "No"...and others had suffered serious sub-floor water seepage from nearby ornamental ponds...)  We offered $360,000.  The $1,300 sq. ft. unspected home went for $425,000.