In-person auctions are exciting and relatively straightforward. Everyone gets together, items come up for bid, bidders raise their paddles or placards to indicate they would like to bid, winner bidder pays and everyone goes home happy. But do online auctions operate in the same manner? Like any hobby or business practice, there are those who push the boundaries and will try to take advantage to get an inside track or an extra buck, so what should you look out for at both in-person and online auctions?
Both online and in-person auctions will sometimes intentionally low ball their prices. Knowing that the item(s) in question will be highly sought after, the auction house or private seller will intentionally place the reserve price significantly lower than it should be. This tactic will often drive a considerable uptick in interest for the item and can create a hot bed for potential bidders. More bidders = more bids, which drives the auction item quickly above and beyond the original reserve price.
Shills are a group of sellers or individuals who have decided to work together to drive up the prices of certain items. Simply put, one person puts and item up for bid and a few others will drive up the price by placing empty bids until an unsuspecting party comes in to the equation. Once the legitimate bidder places a bid topping the others, the seller’s partners drop out of the bidding and leave the genuine bidder holding the bag. Running shills in prohibited in most auction houses, but online it can be much more difficult to detect when or if there are shills running in the background. The easiest way to avoid being taken is to simply set your own personal limit on the item, and to walk away if bidding passes that dollar amount. It can be tough to let that dream purchase go, but it’s better than being stuck paying for an overpriced item.
Trust Your Eyes
Many people are drawn to auctions by brand names. Luxury brands draw in bidders who are seeking luxury brand names, but with auctions you can sometimes find amazing deals if you’re willing to look past the brand. Sometimes in-person auctions will have a separate section with lower priced goods. While these items won’t draw the crowds, you can easily find quality among the lesser known designers and brands. Do a little research of your own on some unfamiliar or non-household brand names and you could be rewarded with great quality at an even better price point.
Protect Your Funds
Find out if the auction you’re participating in will allow you to pay via an online escrow service. Online escrow protects both the buyer and the seller by verifying and hold purchase funds with a neutral third party. Buyers are protected as funds are only released when there is proof that the item has shipped or has arrived at its final destination. Sellers and auction houses are protected as all purchase funds are verified upfront – eliminating the risk of insufficient funds, fraudulent checks, and credit card chargebacks.
Sometimes the best protection you can have in any auction setting is to trust your gut and set ground rules for yourself. If you know exactly how much you want or can afford to spend, going above that limit should happen in only rare circumstances. Trusting your gut is also important. Often times if a deal or situation seems too good to be true, it usually is.