Jim 'Griff' Griffith

Was That Really Your Maximum Bid?
by Jim 'Griff' Griffith
eBay Staff Member

Q: Griff, I have started buying quite a bit on eBay relatively recently and have discovered a nasty surprise. Certain buyers apparently know a trick that they use to grab an item that I have been bidding on, in a sort of stealth manner, without me having a clue that they are planning to do so.

For example, I might bid $50 on an item that has a bid of $10, with perhaps four days left to go before the listing ends. I might then place a maximum hidden bid of $102 on the item. There might be no other bids for the next 3 days, 23 hours and 59 minutes. Then, all of a sudden at the last minute, perhaps with 10 or so seconds left for the listing to end, a “surprise” bid comes in at $103. I end up losing the item that I've been watching so carefully, with no chance to place a higher bid before bidding closes. 

I have experienced this a number of times and feel that it is no coincidence. In several instances, all that my watchful waiting has done has been to increase the price of an item greatly for the seller, while I have ended up as the stalking horse for some other determined buyer who knows more about how to “trick” the eBay system than I do. Somehow, these bidders seem to be able to detect my reserve bid without my seeing any bid activity by them. And they are able to place a winning bid within a few seconds of the closing time. How is this possible and what, if anything, can I do to prevent this? I am so frustrated that I am about ready to end my eBay activities.

Help,
Discouraged.  

A: Hello Discouraged,

Sorry to hear this. Rest assured, no one is "tricking the system," you are not being used as a "stalking horse," and no one knows the amount of your maximum bid before their own bid is executed. In fact, what you have experienced is exactly how an auction-style listing on eBay is supposed to work. In an auction-style listing, the person who bids the highest amount (regardless of when the bid is placed) wins the item.

Before I explain the process, here is a trivia question, the answer to which will come later:

In an auction, who determines the final price of an item?

Listings on eBay are open for bids until the very last second indicated for the closing time. Up until that second anyone can submit a bid for any amount. The fact that someone places an earlier bid does not give them a claim of ownership or an advantage over subsequent bidders. Quite a few bidders who are outbid by someone willing to pay more than their bid feel that the item was "theirs" and that the outbidder "stole" it from them.

Not true.

The seller owns the item until the listing closes, whereupon the person who bid the highest (not the earliest or latest) bid wins the item.

It is true that many buyers prefer to bid in the last moments of a listing. There is nothing wrong, unethical, or illegal about bidding at the last minute. The listing is open to everyone up until the indicated end time.

Note that this practice of bidding in the last moments of a listing does not necessarily guarantee that a bidder will win the item. It is not when a person bids but how much they bid that determines who will win the item.

In your case, you stated that you placed an earlier maximum bid of $102. While it's true that the bid amount was $102 and that you placed it earlier than the eventual winner, was it really your maximum bid? It probably wasn't—otherwise, you would not have been upset when you were outbid. Disappointed maybe, relieved in fact, but not upset.

A maximum bid should be just that—the absolute maximum you are willing to pay for an item. If you say that $102 is your maximum amount, and then you are upset when you are outbid ("I would have paid more..."), then $102 was not your maximum bid. Make sense?

By the way, no one knows or can detect your maximum bid. What is happening is that the winning bidder is placing a bid for an amount that is either one increment over your maximum, or more likely, higher than your maximum bid. The winning bid shown is not necessarily the amount the high bidder won. In the case that you shared, it is more than likely that the actual bid amount placed by the winning bidder was much higher than the final winning bid amount of $103. Just as eBay does not display your maximum bid until someone outbids you, the actual maximum bid of the winning bidder is also not displayed if it is more than one increment over the previous maximum bid (yours, for example). eBay only displays an amount that is one increment above the previous maximum bid—also known as the underbid—amount. It's the same exact mechanism and procedure for all bidders.

So, my advice for more effective biding? Bid more. I know this sounds flippant but it is the only advice that I can give.

When you submit your maximum bid amount, make sure that it is actually your maximum amount—to the penny. Then if someone is willing to pay more than your maximum, you won't be that upset when they win the item. You'll likely say to yourself, "Good luck to them. At least I don't have to pay out more than my absolute maximum amount." And if no one is willing to pay more than you, then you win the item! Maybe even for less than your absolute maximum.

The answer to the trivia question (in an auction-style listing, who determines the final price of an item) is:

The underbidder! (The underbidder is the person who placed the second highest bid).

It's the underbidder whose second-highest bid "supports" the higher final bid price that the person willing to bid more ends up paying.

Regards,
Griff