Once you have registered on eBay and done your homework about an item you want, you are ready to bid.

What happens when you place a bid? As with any auction — whether online or off — placing a bid is the equivalent of entering into a legally binding contract by which you agree to buy the item if you are the highest bidder. Except for certain instances (see the discussion "Retracting a bid," below), you are not permitted to terminate the contract. For that reason, always be prepared to buy when you click the "Place Bid" button.

Retracting a bid. You cannot retract a bid unless one of the following is true:

  • You made a typographical error and entered the wrong bid amount

  • The description of an item changed significantly after you placed your bid, or

  • You cannot contact the seller — the seller's phone doesn't work or your email comes back as undeliverable.

There are more to retraction rules (including time limits for making retractions), but the important point to remember is that retracting a bid is difficult. Also keep in mind that a member's retraction history is available to all eBay users. A buyer with a history of retractions may be suspected of participating in various fraudulent schemes, as discussed in Rules, Disputes, and Feedback.

Placing a bid. Once you're prepared to bid, click "Place Bid" on the item’s listing page. In the sample listing below, note that the item’s history indicates no bids have been placed. In that case, your bid must match the amount the seller has for the "Starting Bid" (in this case, $3.50).

Example 1: Placing a bid

Place A Bid

On the Place a Bid page (see an example below), enter your maximum bid, the highest price you will pay for an item. As you can see, the buyer's maximum bid must at least meet the starting price (in this case, $3.50). You can raise your maximum bid during the bidding process, but you cannot lower or retract it once it is confirmed.

Your maximum bid is kept confidential. Under a system known as proxy bidding, which is more fully described below, eBay compares your bid to other bidders in the auction, incrementally increasing it until reaching your maximum bid, when you will be notified that you have been outbid.

Example 2: Placing a bid

Place A Bid

To avoid confusion, use the decimal point when entering your maximum bid — for example, $10.00, not $10 or $1000. After entering the amount, click "Continue."

Review Bid

On the Review and Confirm Bid page, you are given an opportunity to confirm your bidding information. Once you click the "Confirm Bid" button, you are officially "in the game," will see a confirmation screen, and will receive a confirmation email.

High Bidder

Information about the item and your bids will appear in the "Items I'm Bidding On" portion of your My eBay page.

Items I'm Bidding On

When you confirm your maximum bid, you may immediately see a page similar to the one below, indicating you have been outbid. How could that happen so quickly? Under the proxy bidding system, another bidder may have placed a higher maximum bid. If your maximum bid is lower than the other bidder's, you will automatically be outbid. However, you may stay in the game by increasing your maximum bid.

Example: You’ve been outbid

You've Been Outbid

Bidding on a reserve price auction. A reserve price is a confidential minimum price that the seller requires before selling the item. Bidders are aware there is a reserve (that fact is indicated on the item listing page), and bidders are aware whether the reserve has been met (also indicated), but the bidders do not know the amount of the reserve. If bidding on an item with a reserve price, you will not know whether you have reached the reserve until bidding surpasses it. Assuming the reserve price has been reached, the item is sold to the highest bidder as in any other auction. If the reserve is not met, the seller can choose whether or not to sell to the highest bidder.

Proxy bidding. Auction bidding is accomplished under a proxy bidding system. eBay automatically bids for you (up to your maximum bid) in a series of bid increments. In other words, after you place your maximum, eBay automates the bidding process, measuring your bid against competing bidders and incrementally raising the bids — something like an automated poker game. The incremental amount that each bid increases depends on the current price of the item and can range from $.05 (for items with a minimum price of under a dollar) to $100 for items with a minimum price of over $5,000. If you are outbid you will be notified by email.

Tracking your bids. You can track your bidding at your My eBay page. If you are outbid, you can re-enter the fray by clicking the "Bid" button on the item page. You can also receive bidding alerts via instant messaging (IM), text messaging, Skype, and telephone.

Sniping. Quite a few auctions (approximately 15%) are decided in the final minute of the auction time period. The process of waiting until the last few moments to place a winning bid (before anyone has time to outbid you) is known as "sniping." While it may seem like foul play, there is nothing illegal about the process. eBay even acknowledges that "Sniping is part of the eBay experience," and many software products and services are available to enable the practice. (See a product comparison at the AuctionBytes website.) There are two approaches to sniping:

  • online "hosted" services such as eSnipe that will handle the sniping for you and take a cut (for example, 1 percent out of each winning bid up to $10); you only need to supply your maximum bid; and

  • standalone software products such as Auction Sentry that requires users to monitor the auctions

As the AuctionBytes comparison demonstrates, each approach — hosted or software — has its advantages and its fans. You can also read the eBay Reviews and Guides section where there are many articles on the topic (type "sniping" into the search box).

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