Well I must admit, I love a good auction. The rush of adrenaline that flows through the body as the clock ticks down, that feeling as if you, and only you has discovered the preeminent system for eliminating competing bidders and achieving the lowest possible price. Every possible emotion shows its face, from anger that spiritfingers007 has just outbid you, to that satisfying revenge when you increase your bid increment by $20 and smash him out of the park. That europhic feeling that you have just conquered the world and achieved the ultimate.

Now I ask myself, would I have purchased the same product for the winning price if it were not an auction. If there wasn’t elements of Gamification on the website aimed to temporarily suspend rational judgment and keep me clicking. Then the sad reality hits, that I have forgotten to add the 20% buyers premium to the winning price. I have just fallen victim to the Online Auction.

One estimate states that about half of eBay auctions result in higher sale prices than the “buy it now” price. This is a paradox. If the people going into the auction really wanted the item so badly, why didn’t they get it for less by paying the “buy it now” price?

Once we’re involved in an auction we’re not just paying to own the sale item, we’re paying to beat other people who are bidding and prevent them from having it. So it seems Gore Vidal had human nature, and the psychology of auctions, about right when he said: “It is not enough to succeed. Others must fail.”

The reason we end up overspending is a result of one unavoidably irrational part of the bidding process – and that’s ourselves.

It’s not all doom and gloom, there are some great opportunities as a result of online auctions and some unbelievable bargains to be had.

Top 5 Tips to avoid the pitfalls of Online Auctions:

1. Set a Limit.Have a clear idea of how valuable the item being auctioned is TO YOU and determine the maximum amount that you are willing to spend to obtain it. Don’t forget any taxes, surcharges or delivery.
2. Do your research.Check to see if the item you are bidding for is something that comes up for auction on a regular basis or a one-of-a-kind item. This will help you decide on priority of a win.
3. Check the bid history.The bid history may give you a clue as to who your competition is, how badly he or she wants the item, and how closely he or she is watching the auction
4. Be willing to walk away from the deal.The item you’re bidding on, unless it’s as rare and valuable as the Crown Jewels, will probably appear elsewhere on another day and perhaps even be offered minutes later from the same seller.
5. Maximum Auto Bid.Don’t watch the auction. By using a maximum bid, you will never go over your budget.