eBay's Proxy Bidding!

If you're new to online auctions then ebay's method of bidding can be a bit confusing. E bay online bidding process uses is called proxy bidding. Proxy bidding is the process where a bidder enters a maximum price they are willing to bid on an item. Now, Ebay takes over the bidding process for the bidder and bids automatically. If the maximum bid entered is the highest bid then that bidder will take the lead, but only by one increment, or if it is the first bid the bid will be the exact amount of the opening bid.

Proxy bidding's key factor is the maximum bid that you enter. Your maximum bid stays hidden until someone else enters a bid higher than yours. At this point they will take the lead and their maximum bid will be hidden until another person outbids them. The exceptions to this rule occurs when the first maximum bid was greater than the second-highest bid by less than one increment. The first bid will rise until it is greater than the second bid by one increment. Then next exception occurs when the second max bid entered is equal to the first max bid or a tie. In this case eBay awards the high bid to the first person to bid on the item. This bidding process will continue until the end of the auction.

Once the auction ends the highest bidder must pay an amount equal to the second highest bid plus one increment. In other words you might not have to pay your maximum bid, you will only pay the amount of the 2nd highest bidder plus one increment. An increment is defined by ebay and it depends on the value of the second-highest bid. If this is the case your maximum bid will never be revealed. It is kept secret from the other bidders.

Here is a real life example to better explain. Jon has an auction for a antique vase and the opening bid is $5. Bill is the first bidder and he enters a maximum bid of $200 for the vase. Sue is the second bidder and she enters a maximum bid of $150. Ebay's proxy bidding system will increase Bill's current bid to $151 and he will still be winning the auction. Sue immediately decides she wants to place a higher bid of $200 for the antique vase. Ebay's proxy bidding system once again takes over and pushes the current bid to $200 but Bill will still be the current high bidder because he bid $200 first and Sue did not bid enough to overtake his max bid. Sue gives up on the auction and Jill decides to bid on the last day of the auction. Jill sees the current bid is $200 so she decides to bid $220. Jill takes the lead in the auction. Just as the auction is about to end Bill returns to see his bid has been beat and decides to bid $250 for the antique vase. The current bid is pushed to $221 (one increment higher than Jill) and the auction ends. No one will ever know that Jon bid $250 for the item. As far as everyone else knows he bid $221 for the vase.

Bill has to pay the seller $221 (and shipping costs) for the item. That equals the second highest bidder's max bid ($220) + one increment ($1) for a total of $221.

The biggest advantage to proxy bidding is that you don't have to sit at your computer and constantly watch the bidding war. Ebay will automatically bid for you until your max bid is reached. If you really want an item then you can bid a maximum bid and then not worry about the bidding until the end of the auction.

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