Auction Strategies
The Good The Bad and the Ugly

You can see the popularity of auctions all around, There are adverts in newspapers for garage auctions where people are auctioning off their unwanted things. There are auction websites such as EBay and the TV is filled with people making a killing at auctions.

Auctions are popular because each auction is a contest, with the winner being the highest bidder. The seller also is a winner as he has won the money prize. We all like watching and taking part in contests, and with auctions it is easy to be the winner.

One way to win as a bidder is to wait till the last minute and then make your bid. This is known as sniping, and is a legitimate tactic to use, and there are even programs that automate this tactic. As a buyer you can protect against snipers by putting in a 'proxy' bid that will automatically just beat the snipers bid. Some auction sites automatically extend the auction if there are any last minute bids.

Another strategy is to bid early and hope no one outbids you. You risk not winning the item, or having to bid against the other players. If you are lucky the auction will end with no other bids especially for an item that attracts little attention.

These things are all part of the auction game. All are legitimate ways to win and profit from auctions.

However there are certain things you should look out for as a buyer in an auction to determine if it is legitimate.

Legitimate auctions are those that are not manipulated by the seller to increase their profit.

One thing to look out for is shill bidding where a ring of sellers and buyers cooperate to either to push up the price of the item for the seller or to keep the price low for a buyer. This (illegal) tactic is known as shill bidding, is now fairly rare and easy to detect;

The shill bidder (working with the seller) will try to push up the price of an auction by enticing bidders into a bidding contest, the shill bidder will then 'pull out' at the last minute, and the seller will then contact the next highest bidder offering the goods at the price he had originally bid.

If you are the seller - look out for the unexpected high bid that exceeds the true value of the item, the high bid will discourage other bidders. Just before the auction ends the high bidder 'pulls out', and his accomplice with the (much) lower bid wins.

Look out for a “buyer” that has never won anything but is constantly bidding on many items. This could of course be just bad luck on his part but could also indicate a shill bidder.

If as a buyer you see the price skyrocketing early in the auction and if there are only a few people bidding, you may be witnessing shill bidding. Unless the auction is near closing, you will never see an auction’s price going up immediately.

Another thing to look out for in an auction is high shipping costs. Some sellers give a buy-it-now price below the true market value of the item. However, the shipping costs make up most of the price you will pay. When setting you upper limit take the total price including shipping into account.

Most buyers and sellers at auctions are honest decent people, trying to sell at the highest price or trying to buy at the lowest price. They will use many legitimate tactics to maximise their profits - this is all part of the game. Just be aware that, as in any trading activity, there are the occasional cheats. And it is worth keeping an eye open for them.

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