The minimum it will cost you is 3%. Even after a player has been on your roster for a long time you can only receive 97% of the sale.
It can be a tactic by managers to try and create a bidding war but the risk is that you end up winning back the player yourself. I guess another reason might be between the time you listed and the end of the auction time you pick up an injury and would rather stick with the player you know than try to find a replacement.
Either way, you just need to be a bit more careful and I wouldnt recommend trying to bid unless the player is going to net you 90+% back.
Lastly, when you buy back you will notice the players sell-on % is reset too......