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Comment by biesnecker | Hacker News Reader

So sales are up, and inventory is up, but days on the market is down sharply. It seems reasonable that if houses are going faster then higher bids are being made because you're not going to get a second chance.

Totally unrealistic, and somewhat antithetical to the whole idea of free markets charging what consumers will bear, but this is where Vickrey auctions would be amazing: https://en.wikipedia.org/wiki/Vickrey_auction

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Really interesting concept. What's stopping me from bidding an absurdly high amount, knowing that I'll win and only pay as much as the second highest bid? I guess I'll have to be the only one trying to do this for this to work?

Nothing, so long as you want the home more than your absurdly large amount of money. Otherwise, all it takes is the existence of another high bid to make you pay your absurdly large amount of money minus epsilon. You may experience buyer's remorse and wish you had the pile of money over the home.

Alternatively, if there is no other high bidder, then you would have gotten the home with a lower bid. The scheme is quite clever in how it incentivizes every bidder to bid exactly what they value the asset at.

Nothing stops that, but presumably there is a "Max price" you are actually willing to pay. If more than one person uses the absurd bid strategy then you're screwed, so the incentive is to just put down your true Max price willing to pay.

This is how it's done in the Netherlands, actually.

Interesting! I have a question about how it works in practice: In the US, there are often extra considerations beyond the offer price. For example, someone paying in cash can typically offer less than someone who needs a mortgage, due to the lower risk of the offer falling through. Or I might bid less, but require that an aging roof be replaced at the current owners' expense. How do they deal with that in the Netherlands?

I've never encountered it, and I'm a homeowner in the Netherlands. The sealed bid auctions I've seen were all regular ones were if you are the highest bid you have to pay that price.

This is factually incorrect. There are rules regarding the bidding process for buying a property in the Netherlands (Amsterdam model, Haarlem model or closed bidding with deadline), but none of them include a part where the second highest price is used.

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