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How auctions get lower prices
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6. COMPARATIVE
If two or more people want to buy the same home, the worst thing you can do, from a negotiation point, is to allow each person to SEE what the other is offering! Instead of offering their highest price, each buyer will only offer a SMALL amount above what the other buyer offered.
Auctions are touted as being competitive - but the competition is in PUBLIC not private - which makes it COMPARATIVE more than competitive. Everyone compares what everyone else is offering.
It's like playing cards and knowing what the others are holding. By making the negotiation so public, the buyers have a tremendous advantage over the seller. Instead of having to offer their highest price to win the auction, buyers only have to outbid the buyer below them.
And this is how auctions get lower prices.
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