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How auctions get lower prices
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7. DECEPTION
To persuade sellers to auction their homes, agents will talk about high prices. And then to get buyers to come to the auction, the same agents will talk about low prices. Most times both the seller AND the buyer are deceived. The sellers end up selling for less than they were told they could get, and the buyers often end up paying more than they were told they could pay.
The most infamous deceit is Dummy Bidding where agents use bogus bids to keep the auction moving. Some agents deny that Dummy Bidding exists. But consider this: How do you have an auction with only ONE bidder?
Most people think Dummy Bidding increases the price. But Dummy Bidding deceives sellers as much as buyers. It is used to get the price up to the point where it can be sold - the reserve price.
Usually, once the home reaches its reserve, the agent stops using bogus bids. The home is then sold for its lowest price.
And this is how auctions get lower prices.
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