I am a sucker for an auction. It must be a family failing since my husband has his own favorite online auction sites. An auction can be a good place to buy, but like with any other purchase, mistakes can be made. Understanding how an auction works and bidding responsibly may mean the difference between a good buy and spending too much.
When you bid on an item, it is a method to match supply and demand. The higher the demand, the higher the price. So if you are bidding on a much-prized item, the price may come in higher. That’s the reason that auctions are used often for selling more expensive items, such as art, jewelry and rare coins.
Recent research by the University of California, Berkley gives us some clues on how auctions cause us to spend more. An item was auctioned with a $45 starting bid or bidders could “buy it now” by spending $125. All the bidders chose to start with the minimum bid because they were hoping for a lower price. However, 43 percent of bidders blew right by the $125 “buy it now” bid and kept raising the bid as necessary to secure the item. In fact, we are a competitive lot when it comes to auctions. The urge to win the item sometimes overrides our best intentions on what we should spend. You derive a pleasure from bidding and from beating the others who are bidding against you. The ancient Romans called the urge to win as “bidder’s heat.”
Now that we know why we bid, remember there are ways to get the best deal when it comes to auctions whether online or in person.
Get the lay of the land. If you’ve never been to an auction, go to one and simply don’t bid. You’ll check out how things work and become familiar with the process. The same advice applies when doing an online auction. Make sure you watch a few items sell so you’ll know how it works.
Know the market and do your research. This is particularly important when it comes to online auctions. Check out what items are worth before you bid. You might check eBay’s “completed” auctions section to see what items are selling for. Set the maximum price that you will pay and don’t go above it.
Check the fine print. Is there a buyer’s premium? This is a surcharge of 10 to 20 percent of the selling price that is added to the final bid. The auction will be clearly posted if there is a buyer’s premium. I haven’t seen this on eBay, but seized property auctions add this surcharge. Make sure you know if you are paying just what you bid, or the bid plus the surcharge.
Before you bid, check the merchandise carefully. If you are attending a live auction, go to the auction preview. Then you will know exactly what you are bidding on and the condition of the item. If it is an online auction, it becomes a bit more complicated. Study pictures that are posted on the auction site. Do your homework and know what the items are worth. Ask questions of sellers through email.
Don’t be afraid to walk. There are always more items that will come up in the future. Don’t get so wrapped up in the bidding that you overspend just to win the auction.
If you are bidding at an online auction, be sure to add in the cost of shipping to your total cost.
Auctions can be entertaining as well as a method to get the items you want. By carefully researching and paying attention to all the costs, you’ll have an item that is just want you want and it might even come in at a bargain price.
Roxie Rodgers Dinstel is associate director of Cooperative Extension Service, a part of the University of Alaska Fairbanks, working in cooperation with the U.S. Department of Agriculture. Questions or column requests can be e-mailed to her at email@example.com or by calling 907-474-7201.