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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?

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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.

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.

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