In your example, I tried bidding $20,000 (I really love the couch) and you asked me to come down to $1500. Is there a reason you're steering buyers towards a minimum price?
The current system seems like it favors predatory buyers over fair ones. If the seller undervalues their item, trying to start at a fair price will get rejected. I don't know how you selected the [500 1500] envelope on price, but it seems pretty narrow. Couldn't you just warn the bidder that their bid is way above the seller's expectations (or current maximum offer) and then confirm they want to pay that much?
For instance, someone might do a real bid of $500 (let's call them bidder A), but if there's a fake bid of $2000, would the virtual cat try and make bidder A bid higher than $2000?
A suggestion is for a short text field for comments, to differentiate tie-breakers for the seller maybe?