On an average they may not have. Three separate million dollar houses get offered 900k, 900k and 1.2M. The point is that the guy offered 1.2m knows he will not

On an average they may not have. Three separate million dollar houses get offered 900k, 900k and 1.2M. The point is that the guy offered 1.2m knows he will not get the 1.2 anywhere else and takes the offer. The individual house is overvalued but you don't find out until after, let's say, 7000 of those sales.