Let me start off my soliloquy with an analogy.
Suppose you buy a new house and would like four televisions to put in your house. You see a nice television on eBay for $300 and decide to visit Craigslist in light of a better deal. You browse nearby and find someone is selling four of the exact same television you saw on eBay in the exact same condition.
Now let me stop here, which would be more reasonable:
A) You offer the man $1000 for all four televisions, saving him some trouble of finding someone to sell them to while getting a pretty good deal.
B) You offer the man $1500 for all four televisions, paying more than you would at eBay for televisions from someone who has no return policy.
For most people, A would be the most reasonable choice. The man doesn't have to worry about selling the TVs anymore, he doesn't have to sell them on eBay or other sites or find a friend to sell them to. In addition, you get the TVs you wanted for $200 off.
Now apply this situation to WoW. I can't tell you how many times I've posted in trade "Wanting to buy [Cinderbloom] stacks, whisper the quantity you have and I'll reply with an offer," people will send me whispers with varying amount of herbs and I'll reply with an offer that is 10-15% lower than the Auction House. Most all of them reply with some form of "I could get more than that on the AH!" Of course you could, just like I could have (in the analogy above) paid eBay (Auction House) price, but instead I went to Craigslist (Trade Chat) for a better deal.
In a simpler sense, if I wanted to buy 100 Cinderbloom for 650g (AH Price) why wouldn't I have bought it from the AH?